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Remortgage – what does it mean?
To remortgage means to switch your current mortgage deal to a new one either with the same or different provider. With the average mortgage term for around 25 years, there are always going to be better rates and options available to homeowners in the UK. To remortgage your property allows you to take advantage of new deals, offers and introductory periods that will allow you to save money over time without having to leave your home.
A common reason for remortgaging is because the introductory period on your existing property is no longer applicable. The introductory period usually lasts for two to five years and offers a lower interest rate as an incentive for new customers. Once this initial period is over, homeowners are put on the mortgage providers’ standard variable rate (SVR), which could be around 5% but this much higher than the average interest rate. To avoid paying a higher rate, property owners try to switch to better deals and this is commonly known as ‘remortgaging.’
Remortgaging – what are the advantages?
The main advantage of remortgaging is that you can reduce your monthly repayments by switching to a better deal. The idea is to find a mortgage from your existing or new provider that has a better rate and introductory period. If you can switch from paying 5% per month to 3%, you could save hundreds or thousands of pounds a year.
Since the Bank of England base rate has been 0.5% since 2009, you could realistically move your mortgage deal from a higher rate to a lower one. With such stability, homeowners can take advantage of tracker mortgages with low rates. Also, property owners may find that they have been able to save money over the last few years and would now like to try use that saved money to lower their monthly interest repayments through an offset mortgage.
If you wish to repay your mortgage early, there are always early repayment fees that apply. However, a new remortgage deal may allow you to overpay earlier than your existing deal and for less.
Remortgaging is common to consolidate your debts. Getting a mortgage is like getting a big loan secured on your home. So if you have a lot of outstanding loans and credit card bills, you can remortgage to borrow more money to pay off your debts. The rate you pay on a mortgage is much cheaper than what is charged for personal loans and credit cards, which is why many see remortgaging as a viable option for raising capital. If you plan to remortgage for debt consolidation, it is important to follow a strict plan to clear your bills and not be tempted to run up more debt.
But the simplest thing about remortgaging is that you don’t have to move home. You can continue to own or live in your premises and there is no need to move out or change address.
Use our Remortgage Calculator to see how much you could save
A remortgage calculator is essential when deciding whether or not to remortgage. The sums are very important when its come down to it because you need to know if switching mortgages is more cost-effective. There are always costs for getting a new mortgage deal such as arrangement fees, legal fees, valuation costs and set up costs amongst others. Therefore it is a matter of doing the maths to see if you would be better off switching and this is why using a remortgage calculator is vital.
Quiddi to the rescue! You can find our remortgage calculator on the left hand side of the page. Directly from The Money Advice Service, the calculator asks you to enter a few details about your income, monthly take home and property value and we will be able to be able to tell you the different rates and fees available to you.
How to remortgage
How to remortgage is simple. Once you have used our remortgage calculator to see if it is better value to switch mortgages, click on the button that says ‘compare quotes now.’ You will be asked a few simple questions about your finances and property and will be recommended to the mortgage provider best suited to you.
Switching mortgages if it is done by post or online is known as ‘execution only.’
The Quiddi Compare website offers a full remortgage comparison service. We work with the leading mortgage providers in the UK to offer the best remortgage rates to our customers. It is completely free to use our remortgage calculator and comparison service and we will never pass on your details to unnecessary third party companies.