For most homeowners your monthly mortgage payments will be your biggest regular outgoing expenditure. Statistics suggest mortgage payments take on average 22% of disposable income. However, for young first time buyers this % can be as much as 50%. (Before remortgaging I paid £890 a month out of a monthly salary of £2,000. These are some of the reasons to remortgage your home.
Benefits of Remortgaging
- Mortgage lenders charge a higher interest rate to customers who don’t wish to bother remortgaging. Customers who are happy to stay with their current lender will typically pay the SVR of the lender. This is much cheaper than deals available for remortgaging and new customers. Don’t lose out on savings of £200 a month, just because it requires some effort.
- Switch to a more appropriate mortgage. When I remortgaged I took the opportunity to extend my mortgage term and switch to interest only. This was because I wanted to work part time to invest in a business. Your best option may be to switch to a fixed rate mortgage. A fixed rate mortgage is good for those on the edge of affordability. It means you can avoid being hit by an unexpected increase in the interest rates.
- Remortgaging for Equity Withdrawal. If you have debts such as credit cards and personal loans you will be paying interest rates.