Remortgaging is one of the many ways you can save some money. However, you first need to fully understand what remortgaging is and how it can help you so you can enjoy its benefits.
You can find important information about remortgaging in the following sections.
You should start with the definition of remortgaging. This process occurs when you change the current mortgage on your real estate property. Most people use remortgaging to acquire property loans with lower interest rates and better terms.
You can do this by changing your lender or getting a different mortgage deal from your current lender.
Reasons To Remortgage Your House
Furthermore, there are plenty of good reasons why you should consider remortgaging your property. Here are some of them:
- Decrease your monthly bill by getting a different term
- Access your house equity to buy a new property or build a new one
- Acquire a fixed payable rate to make budgeting easier
- Pay debt sooner
The Amount Of Time It Takes To Remortgage
On average, it takes about a month to one and a half months to get your house remortgaged. But this varies depending on the result of your proposal. If your lender rejects your proposal to remortgage, it’ll, of course, take some time to look for a new deal.
Also, it depends on how fast you arrive at a decision. If you immediately find a deal that suits your needs and you get accepted right away, you should be able to complete the process quickly.
Deciding The Amount To Borrow
When you’ve finalized your decision to remortgage, you should then figure out exactly how much you should appropriate from your lender. If you’re only looking for lower rates, then you should try borrowing the current outstanding balance in your mortgage.
However, if you’re looking to appropriate more money so you can run your property well, you first need to know how much equity your property has. To get this, you’ll have to subtract the outstanding mortgage from the property value. With this information, you can decide what portion of your equity you’re willing to access. Doing this will let you know how much money you can borrow.
Once you have determined the amount you want to borrow, the next step is to see if you can afford it. That means you have to consider your current finances. Of course, only avail of a deal that won’t negatively affect your current budget.
Consider Your Credit Score
Aside from your budget, you should also check your credit score, as this will dictate how much you can and can’t borrow.
If you have a higher credit score, then you’re more likely to get the mortgage you want. You can check your credit score yourself before even going to your lender. This will give you a heads-up if you’re likely to get that deal.
There are websites online that allow you to take a look at your score. All you have to do is do some research.
Determining Which Mortgage To Get
As mentioned, many lenders offer many different plans and deals out there. It can be overwhelming, so getting a trusted mortgage manager may help. They’ll help you make an informed decision about your remortgage.
With such, here are some of the remortgages available out there:
- Fixed-Rate: As the name suggests, fixed rates offer a standardized amount for a pre-established schedule. The usual length is two to five years, and the rise or fall of interest rates in the market won’t affect your monthly bill.
- Tracker: A tracker remortgage lets your payment be connected to the bank’s base rate first hand. This implies that if the bank’s base rate increases, your payment will follow. The same principle also applies when the base rate decreases.
- Standard Variable Rate (SVR): SVR varies depending on the lender. So, it’s essential to have a look at what they offer. Usually, it’s similar to the base rates of most banks. SVR is almost never placed at the beginning of your term. But you’ll have to pay for it after your initial fixed term ends.
- Discount Rate: Discount rates are offered at the preparatory stage of your payment. This means that your lender will offer you a discount for a certain amount of time. Once that period ends, you’re expected to pay the SVR.
If you’re looking to remortgage your house, you should understand remortgaging first. From its definition to the different types available, a firm grasp of these concepts will help you choose the best deal for you.
Also, you shouldn’t forget to get in touch with your lender right after you make a decision. That way, you can start the process right away. You can always refer to this guide if you think you’re forgetting something.