Remortgaging
All hail the new borrowers.
What is a remortgage?
Many people wrongly think of a mortgage as some kind of financial prison sentence. The fact is lenders are far more flexible now than ever before, due to an increase in competition. While it's true that you do have to repay the sum you've borrowed, plus interest, there's nothing to stop you asking for a review based on good behaviour (i.e. you've proven you can keep up payments and want to renegotiate) or even a transfer to a more laid back kind of institution, one with better terms and conditions.
Why should I go for it?
Review your current deal. If you feel you're paying excessive rates of interest, compared to rival lenders then a remortgage may save on your monthly payments. Alternatively, you may be looking for a way to finance an extension, perhaps, or a new car, in which case you could seek to increase your mortgage and take the extra sum as cash.
Tell me the pitfalls
Much depends on interest rates. You always have to be sure that you can meet repayments whatever the economic climate. Borrowing may seem attractive right now, with interest rates running low, but what if they start to inch up? If you fail to make payments, you could lose your house, and be left wishing that you'd read the small print. Check the details of your existing mortgage. Is there a redemption penalty? If there is, and it's large, it may wipe out the benefits of remortgaging. Mortgage brokers who offer to help you remortgage will often charge a fee on top of your new deal that gets added to your new mortgage, pushing the price up and making it less of a bargain.
I've done the sums. How do I go for it?
Begin by checking the terms of your current mortgage. Some deals lock you in for a certain period, so you need to find out if you're able to bail out without being hit with a penalty of any kind. Next look for a lender that offers your kind of terms. If you're unsure where to start, seek advice from an independent mortgage broker. Before you jump ship, however, it's worth chancing your arm with your current lender. If you've been a good customer, they may tailor a deal to keep you, which will save on the acres of paperwork that inevitably comes with a switch to a new lender.
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