When it comes to managing your mortgage, remortgaging can be a smart financial decision. Much like comparing utility bills or TV packages to ensure you’re on the best rates, it’s equally important to review your mortgage periodically to avoid overpaying.

The Benefits of Remortgaging

1. You’re Reaching the End of Your Initial Rate Period – Most homeowners begin with a fixed-rate mortgage that lasts anywhere from two to five years. After this period ends, your mortgage will typically revert to a Standard Variable Rate (SVR), which is often higher than the rate you were initially paying. If you’re approaching the end of this period, it could be the perfect time to remortgage. You might not need to switch lenders entirely – your current provider may offer you competitive rates to lock you into another term. Working with an independent mortgage advisor can help you assess your options and compare them with the best rates available across the market.

2. Your House Value Has Increased – If the value of your property has increased since you purchased it, remortgaging could reduce your Loan-To-Value (LTV) ratio, which in turn may qualify you for better rates. For instance, if your home has appreciated in value, the amount you owe on the mortgage becomes a smaller percentage of the property’s current value. A lower LTV means you’re seen as a less risky borrower, which opens the door to lower interest rates.

3. You Have More Equity to Invest – Equity in your home increases as you pay down your mortgage. If you have extra funds to put towards your mortgage, your LTV ratio will decrease, potentially securing you better rates. However, it’s important to check your current mortgage terms to ensure there are no penalty clauses that could eat into the benefit of overpaying.

4. You Want a Better Rate – If you’re stuck on a high-rate mortgage due to a rushed decision, it’s time to reassess. Remortgaging to a lower rate can save you a significant amount of money over time. For example, if you can reduce your rate by just a small amount, such as 0.1%, you could save thousands over the life of the loan. Independent mortgage advisors can compare the entire market for you, including exclusive deals that might not be available through mainstream lenders.

5. Your Financial Circumstances Have Changed – Changes in your job or financial situation can impact your ability to remortgage. For example, if you’ve switched careers, gone self-employed, or experienced a pay cut, it might be wise to stay with your current provider, as they’ll be more familiar with your financial history. However, if your circumstances have improved, remortgaging might be a way to unlock better rates.

When Not to Remortgage

1. Your Credit Rating Has Dropped – If your credit score has taken a hit, remortgaging might be difficult. Lenders assess your ability to repay your loan, and if you’ve missed payments, accumulated a lot of debt, or have a low credit score, you might struggle to find competitive rates. While this doesn’t mean remortgaging is impossible, it does limit your options. You may need to consult a mortgage advisor to explore what’s possible.

2. Early Repayment Charges (ERC) – Most mortgages come with an Early Repayment Charge (ERC) if you decide to leave your deal before the agreed-upon term ends. While this charge usually decreases as you approach the end of the term, it’s still something to factor into your decision. Depending on how much is left on your mortgage and the potential savings from switching, remortgaging may not make financial sense if ERCs are high.

3. You Don’t Plan to Stay Long-Term – If you’re planning to sell your property within the next year, remortgaging might not be worth the hassle. The upfront costs of remortgaging, including fees for legal work, valuation, and arrangement, can be substantial. If you won’t be staying in your home long enough to recoup these costs, it might be better to wait until you’re in your property for a longer period. Alternatively, you can speak with an independent mortgage advisor to look at other types of mortgages which you are not fixed in to for as long, such as Tracker mortgages.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. THERE MAY BE COSTS ASSOCIATED WITH REMORTGAGING AND IT IS NOT SUITABLE FOR EVERYONE.