subject: Questions About Remortgaging [print this page] When you are considering remortgaging your property, you will have a lot of questions which you need answering. Here we answer some of the most common questions which arise when you are making this decision.
1. Interest Rates? Now this is a stickler. Advisers may say different things about speculative interest rate changes in the future, but nothing is certain. If interest rates do go up, you may be in a position where your Standard Variable Rate (SVR) is a suddenly a lot higher so you may evaluate a remortgage now is your best option to save money. Perhaps you may want a fixed rate mortgage or a tracker deal. However, if interest rates don't change, or don't change dramatically you may do well to save yourself the hassle of a remortgage and the financial implications of higher payments for nothing. Focus on your finances when considering a remortgage. Basing your decision on unpredictable interest rates is ill advised.
2. Fixed or tracker deal? Bluntly put, the insurance for your loan here is your home. If you can't afford repayments on your mortgage the bank will repossess your home. Base this decision on your financial situation, if you are in a position where you would not be able to afford any repayments if your rate went up, you would do well to be secure in a fixed rate deal where repayments are manageable. If you have the financial flexibility for your repayments to fluctuate you may be more inclined to go for a tracker mortgage.
3. Redemption penalties? If you decide to go with a tracker mortgage, do look at the small print. Many of these type of mortgages will charge you if you opt out of the deal early, or may insist you pay the bank's SVR for a certain amount of time following your remortgage should you decide to switch lenders. Think about this carefully, if interest rates rocket you may be stuck in a sticky situation.
4. Consolidation? A remortgage may be a brilliant way to consolidate all your debts into one simple monthly repayment. Do consider whether this is the best way of consolidating your debts, you may wish to take another loan depending on whether lengthening your mortgage term or paying interest on a separate loan is more financially viable. Remortgaging will pay back your lender over a longer period of time, increasing the overall cost of your mortgage. When you mortgage you will also have to pay legal fees and multiple bank fees to switch lenders.
If you are considering a remortgage get yourself a good solicitor, who specialises in property law, today. Also find yourself some financial advice as you may find your decision to be confusing, it may not be completely black and white.
