Professional mortgage advice can be as valuable to those looking for remortgage deals as it can be to first time buyers. For many people, their mortgage is their single biggest expense. It therefore follows that getting the most appropriate deal can be their single biggest money–saving opportunity.
Interest Rates Can Go Up As Well As Down
Mortgage interest rates offered by lenders reflect wider economic conditions. Tracker rate mortgages can be linked directly to the interest rates set by the Bank of England or those set by the mortgage lender. They usually move up and down in parallel with these rates. Fixed-rate mortgages remain the same for the length of the fixed-rate term. This can be very helpful in terms of money management. There is, however, a risk that rates will drop, but home-owners will still be locked into the higher rate.
Some mortgages offer capped rates. This means that the mortgage rate will move up and down, but will stay below a certain level. This can give home owners the best of both worlds. Both fixed-rate and capped deals tend to be time-limited. This means that a financial plan should involve looking at available options before these special deals end.
Home owners should also look at their savings choices and decide whether they would prefer a traditional or offset mortgage. In traditional mortgages, borrowers make monthly repayments. Offset mortgages essentially function like current accounts with a huge overdraft facility. The idea behind them is that the interest saved on the mortgage is more than the interest lost on having personal money saved in a separate account.
Mortgage Deals Move With The Times
Although mortgages themselves are long-term commitments, the deals on offer vary according to market conditions. They also vary according to an individual’s personal circumstances. In short, the more attractive a customer looks to a lender, the more attractive the deal a lender may offer them.
Lenders use various criteria for judging a potential borrower. One of them is evidence of financial responsibility. This means that having a track record of making payments regularly can help to get a better mortgage deal. Another is, of course, the value of the mortgage.
More accurately lenders look at the value of the mortgage compared to the value of the property. This means that those remortgaging may be in a stronger position than those mortgaging for the first time. Because of this, remortgaging can be a way to save some welcome pennies each month.
Picking The Right Time To Remortgage
An obvious time to remortgage is at the end of a special deal. It is, however, perfectly possible to remortgage before a deal comes to an end. Whether or not this is advisable depends entirely on an individual’s specific circumstances.
Basically those thinking of switching need to make an informed decision as to whether the benefits outweigh the costs involved. Setting up a new mortgage may involve an arrangement fee. If so, this will be payable regardless of when you actually make the switch. If, however, you decide to end your current deal early, you may have to pay fees to your current lender. This could be in the form of an early repayment charge and/or a specific exit fee.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. SECURING SHORT TERM DEBTS AGAINST YOUR HOME COULD INCREASE THE TERM OVER WHICH THEY ARE PAID AND THEREFORE INCREASE THE OVERALL AMOUNT PAYABLE. YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.