Your house is quite possibly your biggest, and most valuable asset. How you utilize that value can help to elevate your financial situation. One way is to refinance or remortgage your home. Remortgaging entails replacing your existing mortgage with a new mortgage.
There are two ways to approach a remortgage. The first is a renewal, where you seek to get an identical amount to what you currently owe. The second is refinancing, where you want to increase the total amount, you owe. This is done by releasing a portion of your home equity.
When you approach a remortgage, the best thing you can do is end the term of your existing mortgage. This means that you can enter a new contract with a different lender. However, before you decide to go down this path, you need to know the benefits or issues that may arise. That way, you can make an informed decision about whether you should remortgage your house.
Reasons for Remortgaging your House
There are advantages to remortgaging your house and positive reasons to consider this option. These include: -
Always make sure to evaluate several options for remortgages before you settle on one that may work for you.
Reasons for Not Remortgaging your House
As you consider all the funds or savings that you could benefit from when you remortgage your home, here is why you may take a step back.
Now you are clear on why you should or should not consider when remortgaging your house. Next, you need to consider the following: -
The Size of your Current Mortgage
This looks at the amount that you currently owe on your existing mortgage in comparison to the value of your home. If your need for the remortgage is small compared to the home's value, you are a lower risk customer. This is because it reveals to the lender that they can recover the debt with ease if necessary. On the other hand, if the balance is high, you may find it challenging to negotiate a good deal, and the savings may not be viable enough to remortgage.
Your Financial Status
The lender will take time to analyse your financial history to ensure that you can afford the new mortgage. This means you need to be ready to provide information on your income and expenses. You may also need to explain whether you have any changes in your circumstances. This could affect your ability to get some funds.
The Terms and Conditions or Fine Print
When you are signing a contract, make sure you read the fine print. This is the most essential part of the contract. You will find information on any limits, such as limitations of early repayment or overpaying. This could affect the speed at which you pay off your remortgage. In addition, there will be information on exit fees. Read these as you may want to switch again in the future. However, you do not need restrictive fees.
Should you decide to remortgage your home, you must shop around for the best deals. Compare remortgage deals to evaluate fees, penalties and all terms. There are now a range of remortgage deals available for people of all ages. These include opting to receive the cash for your home as a lump sum or even through monthly payments.
Like any loan, you need to keep up with the payments. If you already own your home outright, you need to be clear of the risks involved in taking out a mortgage on your property. It means that you are putting your house in the hands of a lender. If you fail to repay, they could repossess your house. Researching to compare remortgages and choose the one that is to your greatest advantage.