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Remortgaging

Remortgaging is where you might choose to change your current mortgage deal whilst staying in your current home. There are a number of reasons that people might choose to do this, but the main one is to try to save money and cut back on the amount that they’re spending on repayments at the moment. If you own your own home, there is a major chance that your mortgage is the biggest payment that you make every month, which is a large financial commitment, and for this reason cutting payments each month could save a lot of money. When initially signing up for a mortgage you are given a fixed rate for a certain period of time – but when that introductory rate ends, the mortgage you signed up to may no longer be the cheapest option on the market, and this is why many choose to remortgage. If your current seller won’t budge on their rate, swapping to another seller is a popular choice.

What you will need to get a better deal

In the past, it was easy to get a mortgage, with lenders offering money to almost anybody – but in recent years, new laws have been introduced which means that this has now changed. You will need a good amount of equity as protection against the money that you are borrowing, in addition to a good credit score. The good news is, though, that lenders now need to ensure that you’re able to repay the amount given to you – so you won’t be offered a loan that you cannot realistically pay back within the given terms.

When remortgaging might not be right for you

Remortgaging won’t be the right choice for everybody, and the best way to know whether it’s right for you is to speak to an independent mortgage advisor in Kilmarnock, as they will be able to look at your personal situation and give you advice on what your best options really are. As a general rule, there are a few groups of people who might not benefit from a remortgage, and that includes people who would have to pay a penalty to leave their current lender, those who are currently in negative equity or only own a low percentage of their property, and those who are already on a good rate. Your Kilmarnock mortgage advisor will be able to talk through your options and decide whether a remortgage is a good choice for you.

Types of remortgage deals

Like when you get a regular mortgage, there are two main options when it comes to borrowing the money that you need. Two common options are a repayment mortgage, or an interest only mortgage. If you opt for the repayment mortgage, the money that you pay every month will cover both the original amount that you owe, and any interest that has built up, meaning that the loan will be paid off at the end of the term. On the other hand, an interest only mortgage will only deal with the interest that accrues, meaning that at the end of the mortgage you will still owe the original amount borrowed. Those who opt for interest only mortgages therefore need to have another investment plan in place to ensure that the capital is covered at the end of the process.

In addition to the type of mortgage, you will also be offered a choice between a fixed rate and a variable rate. A fixed rate will remain static for an agreed period of time – and many people choose it because of the fact that they will know what their repayments are going to be, and will therefore be able to make financial plans. On the other hand, a variable mortgage rate will change depending on many factors; the most important one being the economy. There is no right or wrong choice, and no way of knowing whether you’ll save more money on one choice than the other, but some people prefer to know in advance what their repayments are, and how long they will remain at that level.

Making the right choice

You may feel as though there are many different options to consider when it comes to remortgaging your home – and that much is true. However, the good news is that your independent Kilmarnock mortgage advisor will be able to give you expert advice with regards to your options, and this should help you to come to an eventual decision that is right for you. A mortgage will almost certainly be the largest amount of money that you ever borrow, so getting as much information as you can is key to making the right choice at the end of the process. Your mortgage advisor can help you with this, and enable you to choose the option that best fits your needs.