How Remortgages Can Help You Avoid Higher Standard Variable Rates

Many homeowners do not consider their mortgage until their existing agreement comes near expiration. In some cases, however, it is possible to end up with more expensive payments than anticipated due to the fluctuating nature of mortgage rates. Perhaps you should also consider looking into other possibilities because you might no longer be getting the best deal on your current mortgage.

With the process of remortgages, you will be able to assess your current mortgage and identify other deals that may suit you. It may be for saving money, ensuring stable payments, or releasing money from your property.

Why It Is Important to Review Your Mortgage Before Your Deal Ends

• The Risk of Moving onto a Standard Variable Rate

When the term of a fixed or discounted mortgage deal ends, most financial institutions will automatically switch customers to the bank’s Standard Variable Rate. In most cases, this new interest rate will be higher than the interest rate applicable at the beginning of the agreement, making repayments higher too.

As such, the extra costs could become a burden for many families. Checking out your current mortgage arrangement before the end of your deal is the best way to ensure you can avoid standard variable rate mortgage arrangements.

• Planning Ahead Creates More Choices

Making mortgage choices during the last weeks of the transaction could prove restrictive, as there will be limited choices. Making the choice early gives you enough time to evaluate different products and see how different interest rates might affect your payments in the long run.

It is not uncommon for people seeking the best deals on their remortgage when their fixed-rate period expires to start looking several months in advance.

How Remortgages Can Support Your Financial Goals

• Deciding Whether to Stay or Switch

While some borrowers opt to stay with their current bank through a product switch, others go on to look for new deals from other lenders. Both approaches have their benefits and can depend on the borrower’s particular situation at the time.

Exploring all your options is always a good idea. Borrowers seeking to change lenders on remortgage will be able to find mortgages that suit their needs better than before.

• Accessing Additional Funds Through Your Property

The main objective of a remortgage does not always have to do with interest rates alone. In some instances, homeowners opt to unlock equity in order to finance various initiatives or expenditures. This might involve renovation or improvement costs of the house or educational fees, among others.

Remortgaging with the aim of taking another loan using equity in one’s home is something that many people see as an easy way of accessing the equity accrued in the property. It is prudent to know the impact of the extra debt before embarking on the process.

Conclusion

There comes a point where mortgage deals must expire; however, this does not automatically translate to having to settle for high repayments. Through exploring available options prior to the expiration of the deal, there might be possibilities of obtaining a better interest rate, getting assurance with regard to payments, or even accessing some extra money. Getting the right remortgage deal is one way of ensuring that you stay in control of your financial affairs. If your mortgage deal is about to expire and you would like to find out what options you have, get in touch with Kerr & Watson.

FAQs

What is a remortgage?

A remortgage means changing from one existing loan to a new mortgage; in this case, you can use the same bank that offered the loan initially or a different bank altogether.

When do I remortgage?

Generally, most people begin looking into other options about six months before their existing mortgage expires.

Could a remortgage lead to less repayment each month?

In certain instances, you could find it possible to get reduced interest payments, meaning you will repay less on a monthly basis.

Am I required to change my bank if I am remortgaging?

No, some people may choose to remortgage with the same bank, while others may want to change to get more favorable terms.

Will I be able to increase my loan amount by remortgaging?

It could happen that remortgaging allows you to have access to more cash than your previous mortgage agreement because of more equity in your property.