To some people remortgage is a little bit of a mystery. So when is it best to take the plunge?
A mortgage is like any long term agreement – you need it to revisit it every now and again to see if its still working for you. And that’s what a remortgage is; it’s looking at this agreement you made some time ago and seeing if it stills works for and your family.
So when is this fabled time?
- When interests rates are low. Lenders are always trying to maintain their competitiveness by making sure their interest rates low. This can save you a whole heap of your monthly expenses, if you have had your mortgages for a few years. You can then achieve a new interest rate and lock that in as a fixed mortgage and keep the same rates. Be careful though and speak to a mortgage adviser you trust – your existing mortgage could be a special deal which may not allow a change.
- When you own enough equity in your home – When you only own a portion of your home – the deposit and what you have currently paid off, the rest is mortgaged. The proportions are called the loan to value ratio (LTV). If the price of your house has gone up, your mortgage will be a smaller percentage of the property’s value than it was when you started. So imagine your mortgage is 75% of your home, that means you own 25%, if you remortgage you could get a better deal.
- Your fixed rate ends – Fixed rate mortgages are on a set rate for typically 2-10 years. Once this ends your mortgage is moved onto a standard variable rate, which could be higher or it could be lower. So at this point you have an opportunity to shop around for different deals. Make sure you understand when your fixed rate ends, or if it does. To do this speak to your mortgage provider/lender.
- If it’s right for you – All of the above could be happening none of the above could apply that doesn’t mean it’s not the right time. Remortgaging is about your time to get the right deal.
With remortgaging it can be tricky business and if you leave your current deal too early or in the wrong way then it may cost you and you could end up getting charged. So ensure that it is the right time for you to remortgage, make sure the next deal works for you. Do you want it to be cheaper? Do you want a shorter term on the mortgage? All different needs for different people.
So make sure you speak to someone you trust and ensure you are making the right decision for you, your finances and your family.