Organising Your Finances

Any time you switch your mortgage from one lender to the next, or start a new mortgage with your current lender, you are in the remortgaging process. While it can seem as overwhelming as when you first applied for your home mortgage, changing your mortgage plan can be just as worth it. A remortgage can release cash equity, help you lower your monthly mortgage payments, or just sever a relationship with a lender that has give you nothing but headaches. There are plenty of reasons to remortgage your home, but always make sure to do your research and choose a new home mortgage lender who can not only save you money but also make payments convenient.

Saving Money
One of the main reasons that homeowners decide to remortgage their property is that it may afford a lower interest rate. This in turn lowers the monthly payment that is asked of you. If you were locked into a rate that is now well above the market average, remortgaging will help you to bring down your monthly payment to a more reasonable amount. This frees up money in your budget to pay off other debts, begin to create a formidable savings account, or make home improvements. If you lock into a long term interest rate that is much lower than your current rate, you can lower your payments for the life of your new mortgage.

End of a Fixed Rate
Sometimes a mortgage has a fixed rate for only a short number of years. Loans that are fixed for a mere two- or five-year period may end up having a steep increased payment when the fixed period ends. If you are at the end of a fixed rate, it often makes sense to remortgage. While the fixed rate period afforded you a low payment that worked with your budget, if the market has changed and the new interest rate is much higher you may not be able to afford the new payment. Start to research a new mortgage about six months before your fixed rate period ends, because the process of applying can take several months to complete.

If you have a change in your financial circumstances, it can suddenly become necessary to have a mortgage that doesn’t penalize you for early repayment. Or, you may need the ability to take payment breaks. You might also want to have a mortgage that allows you to extend the overall payment period. Whatever your specific needs are, sometimes remortgaging is the only way to get the flexibility that you need to keep up with monthly payments and avoid as many penalty fees as possible. If your mortgage is too strict and doesn’t work for you anymore, a new mortgage may be the only solution.

Funding Home Improvements
Getting a different mortgage can sometimes allow you to borrow cash against the equity that you have built in your home. When you want to do a major remodel or need to do extensive repairs for practical reasons, a remortgage may be the only way to fund the project. Since home improvements are an investment in your property, borrowing money against your equity for this purpose can pay off in the long term. When it comes time to resell, your property value will be increased thanks to the positive changes that you made. Be sure to have the remortgage process completed before you make any plans for major renovations. In case the remortgage process is delayed or falls through, you don’t want to have made deposits to contractors or started a project that you now can’t pay to complete.

There are many reasons for remortgaging, but they should all be done with a lot of forethought and planning. Opening a new mortgage is also the best idea when you have a good credit rating. A bad credit score will not only hinder the interest rate that you will be offered, but can limit the number of mortgages that you are approved for at all. Bear in mind that a remortgage is seen as a new line of credit on your report, though it is often seen as a good credit line since a home is a financial investment.

How to Remortgae

A Guide to Re-Mortgaging
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