With the wealth of offers and deals that are promoted by lenders these days, it is hardly surprising that borrowers stick with the same mortgage right up until they finally own their home. Indeed, mortgage lenders encourage you to switch.
Why remortgage?
Most obviously, you would remortgage in order to save money. By switching your mortgage to one with lower interest rates you will be reducing your monthly outgoings and potentially saving significant amounts of money in the long term. What may seem like tiny tweaks in the interest rate could have a huge accumulative effect so it is always prudent to look across the long term when you are assessing your repayments. If your goal is to free up money each month in the short term, you may wish to switch to a longer term mortgage i.e. spreading the length of time that you have to make your repayments will reduce your monthly amount.
Debt consolidation
A good reason to switch mortgages might be to take advantage of their lower interest rates in comparison to other loans. Rolling all debts into one low interest remortgage could ultimately save you money and take the pressure off.
Equity release
A key reason to remortgage is to release the equity that might be locked up in your home. In the time that you have owned your house, it may well have increased in value, exceeding the value it was originally mortgaged on; you’re in positive equity. If you want to release this money, be that for holidays, home improvements, retirement or such like, you can switch mortgages to release a cash lump sum or regular income while staying in your home. The amount of equity you release is up to you.
Lenders will often offer remortgaging packages to migrate their customer bases onto different products, show value or perhaps even keep you for longer! They may suggest a fixed rate mortgage at a time when there is a lot of fluctuation in the base rate to offer more security for example. Whatever the reason, make sure you carefully weigh up the benefits of remortgaging - it can be a great way to free up more money to help you enjoy life now, as long as you keep one eye on the future.