A remortgage can seem like a great idea, after all, it gives you a way to avoid losing those amazing introductory rates and stops you from being stuck paying the higher standard variable rate after the honeymoon period of your original mortgage ends. However, while it can’t be denied there are some great benefits to getting a remortgage it doesn’t mean you should always get one.
A remortgage will affect everyone differently and while you could make savings it could also end up not really be worth the extra costs involved. So, before you decide to go for a remortgage or a bad credit remortgage from The Loans Department why not check out our lists of should and should not below.
Reasons To Get A Remortgage
Let’s focus on the reasons you should consider getting a remortgage first, while a lot of the popular reasons people get a remortgage are focused around getting a better deal and saving money a remortgage can also give you better protection against rising costs and allow you more flexibility.
Your Deal Is Coming To An End
The most popular reason people opt for a remortgage is because their introductory rates are coming to end. If you have a fixed rate, discounted or tracker mortgage deal you’re only going to have those bargain rates for a short amount of time. So, when that period is coming to end switching to another mortgage deal will allow you to continue making savings, even when you factor in the exit fees you could still make substantial savings on your monthly payments.
You Want To Reduce The Loan Size
Who doesn’t want to reduce their loan size? If you have the money to do it then it just makes sense, doesn’t it? But many mortgage deals won’t allow you to do it which is why a remortgage can be very beneficial because it will allow you to take out a much smaller loan and pay off a lot of what you still owe.
This, in turn, will give you access to much smaller repayment rates. The downside to this is that you will likely have to pay exit fees and possibly other charges on top. But even when you factor in these additional charges you could still end up with a much better deal.
You Want A More Flexible Plan
Getting flexibility with a mortgage plan is doable, flexible loans are designed just for that after all. However, that period of flexibility will only last for so long which is why remortgaging is a great way to achieve a more flexible mortgage plan for a longer period of time.
Your circumstances can change without much warning as well so even if you didn’t need a flexible mortgage originally you might find yourself needing one sooner or later. Which is why moving to a more flexible plan is ideal for a lot of people and remortgaging will give you a way to do just that.
Reasons Not To Get A Remortgage
So, now that we’ve looked at the reasons why getting a remortgage deal could give you such an advantage let’s take a look at the flip side of the coin. Sometimes no matter how tempting it may be getting a remortgage may not be the best option for you or you might struggle to even get one at all.
Your Loan Amount Is Small
If your total loan amount is relatively small, then you might not achieve much by taking on a remortgage plan. Many lenders won’t even take on plans of less than £25,000 to £30,000 so if your total loan amount isn’t much higher than that going through the remortgage process likely isn’t worth it. Especially when you consider the extra charges you might have to pay, it might seem like you’re getting a better deal but you likely aren’t.
The Charges Are Too Expensive
Speaking of the charges a remortgage isn’t something you can do for free, so what will you have to pay? While there are some variations depending on your mortgage and what remortgage deal you’re after you will likely have to pay a variety of fees including an arrangement fee, an early repayment charge, and an exit fee. When you put all these extra-charges together it could make switching to a remortgage not worth the effort or the extra-cost.
You Simply Might Not Be Able To
Switching to a remortgage might not be possible for everyone or your options could be very limited if you have bad credit. Building up bad credit is very easy to do, and many people do it accidentally without even realising the harm it could do. Lenders will need a lot of information before they agree to a remortgage deal so if your credit history isn’t good enough you might not be able to take advantage of the perks a remortgage offers.
Your Existing Deal Might Be Good Enough
When it comes to a remortgage it is very easy to think you need to move to a better rate when you already have a great deal! Thinking you need to move when you actually don’t is a very real risk and you can easily get caught up in the belief that you could make great savings and then end up moving to a mortgage package that is not as good as the one you’re leaving.
So, I would advise anyone to think very carefully before remortgaging their home, do your sums and take your time and if you’re really having trouble deciding then help is available. A mortgage broker will be able to offer professional advice or any remortgage deals so if you have any doubt or would simply like a more professional opinion on your options contact a broker for some advice.
So, that’s a look at some of the main reasons people should and just as importantly shouldn’t go for a remortgage deal. A remortgage can really save you money but just because they can help doesn’t mean they can’t also be a hindrance so think carefully before you decide to pursue one.