When should you remortgage?

Start exploring your remortgaging options

THERE ARE A number of reasons why you might want to remortgage your home. Perhaps you’re looking to save money on your monthly payments, or you need to raise some extra cash for home improvements. Whatever your reason, it’s important to know when the best time to remortgage is. In general, the best time to remortgage is when interest rates are low. This means that you’ll be able to get a better deal on your new mortgage, and you’ll end up saving money in the long run. However, it’s also important to consider other factors, such as how much equity you have in your home.

INTEREST RATES ARE RISING In light of the recent announcement that interest rates are rising, and with further increases to the cost of borrowing expected later this year, now might be the right time to consider switching to a cheaper deal while mortgage rates are still relatively low. If you have a variable rate mortgage, the Bank of England’s (BoE) base rate changes will directly affect your repayments. This is particularly the case for tracker mortgages, as they’re based on the BoE’s base rate. In contrast, fixed rate mortgages won’t feel the effects of any base rate changes until they’re moved to the lender’s Standard Variable Rate (SVR).

SWITCH TO A NEW DEAL Maybe you’re contemplating a remortgage if you have six months or less remaining on the introductory rates period of a fixed rate mortgage. Remortgaging could save you hundreds a month, so switch and fix if you find a better rate. When your mortgage deal comes to an end, you will be automatically moved to your lender’s basic deal – an SVR, which will probably mean you’ll end up paying a higher rate than you’re used to. In most cases, you could save the most money by switching to a new deal rather than moving onto your lender’s SVR.

NEED TO UNLOCK EQUITY Therefore, remortgaging can be a useful option when your deal is coming to an end because you’ll likely find a more favourable interest rate. What’s more, if there’s a better deal to be had elsewhere, you can change lenders. You might also choose to remortgage when you’ve built up a certain amount of equity in your home or if you need to unlock equity and release it from the property. If your home has increased in value since you took your mortgage out, this means you’ll end up in a lower loan-to-value bracket (LTV).

LOWER MORTGAGE RATES Typically, the lower the LTV, the more equity you own and subsequently, you’re far more likely to be eligible for lower mortgage rates when you come to remortgage. When changing mortgage lenders, you’ll need to consider all the associated costs that might come with switching, from arrangement fees to legal fees.

>> LOOKING TO REDUCE YOUR PAYMENTS, CHANGE YOUR TERM OR BORROW MORE MONEY? << If you want to look at your options for switching your current mortgage rate to a new deal, to discuss your requirements, contact Omni Finance – telephone 01424 236903 – email Simon.hickman@omnifinance.co.uk

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. BUY TO LET MORTGAGES ARE NOT USUALLY REGULATED BY THE FINANCIAL CONDUCT AUTHORITY. OMNI FINANCE IS AN APPOINTED REPRESENTATIVE OF NEW LEAF DISTRIBUTION LTD WHO ARE AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (FCA). FCA NUMBER IS 460421. BUY TO LETS AND COMMERCIAL FINANCE ARE NOT USUALLY REGULATED BY THE FCA