Remortgaging is a powerful tool for homeowners looking to take control of their finances. It's the process of switching your current mortgage to a new deal, either with your existing lender or a new one. But why should you consider it? Beyond simply getting a new loan, remortgaging offers a number of strategic advantages that can help you save money, reduce your term, or access the equity in your home.
Here are the main reasons why a remortgage could be the right move for you:
1. Secure a better interest rate and save money
This is often the most common reason people remortgage. When your current fixed-rate or tracker mortgage deal comes to an end, your lender will typically move you to their Standard Variable Rate (SVR), which is often much higher. By remortgaging, you can secure a new, more competitive interest rate, which can lead to significant savings on your monthly payments.
- Reduce your monthly outgoings: A lower interest rate means more of your payment goes towards the capital, and less goes to interest, making your monthly repayments more affordable.
- Save money over the long term: Even a small reduction in your interest rate can result in thousands of pounds saved over the life of your mortgage.
2. Reduce your mortgage term
Remortgaging isn't just about saving money in the short term – it can also help you become mortgage-free sooner. If you secure a lower interest rate, you can choose to keep your monthly payments the same. This means you’ll be paying off the capital more quickly, allowing you to shorten your mortgage term and own your home outright years ahead of schedule.
3. Release equity from your property
As you pay down your mortgage and the value of your property increases, you build up equity. Remortgaging allows you to "borrow" some of this built-up equity. This can be a smart and cost-effective way to raise funds for major life expenses, such as:
- Home improvements: Fund that new kitchen or extension you've always wanted.
- Debt consolidation: Consolidate high-interest debts like credit cards or personal loans into a single, lower-interest mortgage payment, making it easier to manage your finances.
- To buy another property: Releasing equity can be a great way to fund the deposit on a second home, a buy-to-let property for investment, or even a property for a family member. By using the equity in your current home, you can avoid the need to save a new, large sum of money for the down payment.
Raising funds through a remortgage is often much cheaper than taking out an unsecured loan, as mortgage interest rates are typically lower.
Ready to find out your options?
At IMC Mortgage Brokers, we are experts in assessing these factors to find you the most competitive and suitable product for your needs. We'll help you navigate the complexities of the market and ensure your new deal aligns with your long-term financial goals.
Book your free initial consultation to discuss your options and see how remortgaging could benefit you.