Information correct at the time of publication - Offers, products and services may no longer be available.
With plenty of deals on offer, a remortgage can be a great way to free up some cash or do up the house.
Having the freedom to switch mortgage lenders gives customers who keep one eye on the money market the opportunity to enjoy lower interest rates and reduce their monthly outgoings. So, get mortgage savvy and see how far your money can stretch.
Shop around
New mortgage products are constantly coming on to the market, increasing choice but making it more confusing when trying to decide who to remortgage with. Competition between lenders is fierce, so review your mortgage every three years to see if you can get a better deal elsewhere.
Monthly payments
Most people choose to remortgage to get a lower monthly payment than they are currently paying. Find out what interest rate you're paying, then try to find a lower one with a different provider and you could reduce your monthly mortgage payments.
Revamp your home
A remortgage is ideal if rising house prices are putting you off moving, but you're keen to give your surroundings a facelift. Remortgaging can help release equity locked in your property by allowing you to borrow more than your current mortgage debt. This could then be used for home improvements such as a new kitchen or conservatory which could increase the value of your home.
Consolidate your debts
If you have debts from credit cards, store cards and personal loans, you could reduce your monthly payments by consolidating your debts into your mortgage. The interest rates on mortgages are generally less than credit cards, so although your mortgage will take longer to pay off in the long run, you'll have smaller payments each month.
Interest rates
When deciding on a new mortgage, consider whether a fixed rate or a variable rate would suit your lifestyle. Fixed rate means that you know exactly how much you'd be paying each month, whereas a variable rate mortgage could alter from month to month depending on The Bank of England base rate.
Charges
Moving your mortgage can be a hassle. Before you decide on anything, contact your existing provider to see if they can offer you a cheaper mortgage. Most will try to match any cheaper rates you find rather than lose you as a customer, but if they can't, find out what the costs will be to take your mortgage elsewhere. You might have to pay an early repayment charge (ERC) for ending your contract before the end of the mortgage term. You will also need to factor in the legal costs of moving your mortgage; probably in the region of £250, and a valuation fee of £150 to £200. Some lenders will cover or make a contribution to offset these costs.
Is it worth it?
Get in touch with your current lender and ask for a redemption statement so you can then calculate whether remortgaging is financially right for you. Include all of the fees and charges that would be involved with remortgaging your home and make sure the savings outweigh the costs. Ask the new provider what the long-term charges are, how long you are committed to the scheme and the details of any charges if you should decide to move on again.
CASE STUDY
Peter Booth, 46, is Acting Headmaster of a Secondary School in St. Austell. He lives with his wife and two sons in an end terrace in Probus, Cornwall.
"I chose to remortgage my home as I'd come to the end of a fixed rate two year deal with the Halifax, and didn't want to pay any more than necessary.
I gave Teachers Building Society a ring, along with several other companies, after I'd seen an advert in my teachers' union magazine. I have two boys at University who are costing me a fortune, so I needed to know exactly how much I was going to be paying out each month. Teachers BS gave me the best deal, and the staff were absolutely fantastic. I'm now able to budget a lot better as I know exactly how much my mortgage payments are going to be each month. The staff at Teachers BS made remortgaging my home a simple - almost pleasurable - process.
Teachers BS Remortgaging Plans
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