What is a remortgage?
A remortgage is the process where you pay off your current mortgage and switch your lender. The fee of the previous lender is cut off and you can get a new and better deal that can help you save more each month. Almost third of the home loans in England are remortgages.
When people make the choice of remortgaging, it is mostly based on them finding a better deal with lower interest rates. It is necessary that when consider to remortgage, you should benchmark the best possible rates for yourself and then compare rates on the internet but make sure you use a site that also show direct only deals and not just deals available to mortgage brokers.
How can you cut monthly payments?
When you remortgage, it is obvious that you would choose a lender that is offering you a better deal than the one you had last, which means that you must be getting a much lower interest rate. Lower interest means lesser payment and lesser payment means more money in your pocket.
The best time to remortgage would be when your current deal is about to end. As it ends, the lender applies the Standard Variable Rate which means higher interest rate as compared to other deals available. Apply for a remortgage about 4 months before your deal is about to end.
There is a possibility that you might be hit with an early payment charge which can be a lot, about 2-5% and an exit fee, but that does not mean you should factor out the savings that will follow after you leave this deal. Calculate everything and make your decision carefully. Search for the lender that you can give you a better deal even after considering the exit and early payment charges.
A good relationship
Sometimes the factor that you and your lender are just not at good terms with each other could be a reason why they are not offering you better deals and help with repaying the mortgage. Look for people who are willing to remortgage with a smile on their face and offer help in the difficult situations.
Considering other expenses like a new car or home improvements, it is better to seek out a remortgage deal rather than a personal loan because mortgages have the lowest interest rates as far as loans are concerned.
A remortgage is also a good way to convert all your other loans into one easily manageable mortgage. You can pay off all those loans from the mortgage money and then just left with one debt to manage with lower interest rates rather than several with skyrocketing interest rates.
When thinking of a remortgage always remember to calculate your best affordable rates and then look for lenders that meet these requirements. There is no point in going from one mortgage to the other if you are not able to save at least 25% more than what you were saving the last time.