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According to figures released by UK Finance (formerly known as the Council of Mortgage Lenders), more people are remortgaging than ever before, with 36,800 UK homeowners making the move in July alone – its highest level since 2009.
For most people, their mortgage is their biggest financial commitment. It’s no wonder many are cautious when looking to stick or switch lender. This can make the process feel daunting. However, it doesn’t have to be. In fact, remortgaging has fast become a way in which many of us are not only saving money, but also releasing equity and negotiating mortgage terms to fit with change in personal circumstance.
While remortgaging isn’t compulsory, by switching to a lower rate you could save hundreds of pounds a month.
Let’s take a look at an example. If your property is valued at £300,000 and you have a mortgage of £200,000 with a term of 25 years on a capital and interest basis, if you remortgage to 3.0% instead of 4.2%, you could save around £130 a month - £1560 a year.
So, is remortgaging for you? We’ve debunked some of the most common myths to help you make the right decision:
1. “It’s too much hassle and I won’t see much of a saving” – Remortgaging can actually save you money. Just like looking for a new electricity supplier, by shopping around and switching lenders you could lower your monthly repayments, leaving you with cash to spend on other important things.
2. “Remortgaging is a last resort when I’m out of borrowing options” – People don’t just remortgage their homes to raise capital; remortgaging can actually help you find a more secure deal or flexible payment plan. For example, if you currently have a variable rate product and worry about increasing interest rates, then remortgaging to a fixed rate may offer the financial stability you need.
3. “I won’t bother as my terms will stay the same” – Actually, you could get better mortgage terms if you decide to remortgage. When you first take out a mortgage there may have been a reason why you were offered a more expensive product. If your financial circumstances improve, remortgaging could result in lower rates of interest and therefore, lower monthly payments.
4. “I won’t see any other benefits” – Remortgaging will actually give you access to further equity. If your property has increased in value, or your mortgage has reduced, you could release some of the equity by remortgaging. You may want to carry out home improvements to increase the value of your property before you sell or raise capital for another purpose.
Whatever the reason, a standard remortgage can be completed simply, meaning you could start benefitting from your new mortgage sooner than you thought.
Newbury Building Society is experienced in remortgaging and our expert team is on-hand to answer any questions you may have. To book an appointment with a qualified mortgage adviser, click here.
YOUR MORTGAGE IS SECURED ON YOUR HOME. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.