For many homeowners, a mortgage is one of their biggest expenses. But did you know that remortgaging (switching your current mortgage to a new deal) can be a smart way to reduce costs and improve your financial situation? At Financial Fortress, our independent mortgage advisers in Chester can help you explore your options and find the best deal for your circumstances.
1. Secure Lower Interest Rates
One of the main reasons to remortgage is to get a better interest rate. If rates have dropped since you took out your mortgage, or your financial situation has improved, you could qualify for a more competitive deal. Even a small reduction in interest can save you thousands over the life of your loan.
Example: Jane, a homeowner in Chester, switched her mortgage from a 3.5% fixed rate to 2.8%, reducing her monthly payments by £120. Over 15 years, this could save her more than £21,000 in interest.
2. Reduce Monthly Payments
Lower interest rates usually mean smaller monthly repayments. This can free up cash for savings, investments, or day-to-day expenses, giving you more flexibility in managing your own finances.
3. Avoid Higher Standard Rates
When a fixed or discounted mortgage deal ends, many lenders move borrowers onto a standard variable rate – this is often higher. Remortgaging before this happens can prevent you from paying more than necessary.
4. Access Better Mortgage Options
As you repay your mortgage and build equity, lenders may offer more competitive rates. Remortgaging allows you to take advantage of these improved options, ensuring your mortgage works as hard for you as possible.
5. Consolidate Debts Wisely
Some homeowners use remortgaging to combine higher-interest debts, such as credit cards or personal loans, into their mortgage. While this can reduce overall interest costs, it’s important to consider the longer repayment period.
6. Benefit from Flexible Features
New mortgage deals often include features such as overpayments, payment holidays, or easier switching between deals. These options provide added financial flexibility, helping you manage your money more effectively.
7. Timing & Marketing Context
Knowing when to remortgage is just as important as knowing why. Consider these factors:
- End of a fixed or discounted deal: Avoid reverting to higher standard rates.
- Interest rate trends: If rates have fallen since you took out your mortgage, you could save by switching.
- Improved financial situation: A better credit score or higher income may make you eligible for lower rates.
8. Step-by-Step Process to Remortgage
Here’s a simplified approach to remortgaging:
- Check available deals from multiple lenders.
- Consider fees and penalties, including early repayment charges.
- Apply for the new mortgage with your chosen lender.
- Complete the switch and start enjoying potential savings.
9. Common Pitfalls to Avoid
While remortgaging can save money, keep these points in mind:
- Hidden fees: Arrangement, valuation, and legal costs can add up.
- Early repayment penalties: Check if your current mortgage charges for leaving early.
- Deal restrictions: Some remortgage offers limit overpayments or flexibility.
10. Things to Consider
Remortgaging isn’t free – fees such as arrangement charges, valuation fees, or early repayment penalties may apply. Comparing total costs, not just interest rates, ensures the switch is worthwhile.
FAQs
Q: Do I need a perfect credit score to remortgage?
A: No, but a better credit score can help you secure lower rates and more options.
Q: Can I remortgage if I am self-employed?
A: Yes, specialist lenders and independent advisers like Financial Fortress can help navigate the process.
Q: How often should I review my mortgage?
A: Regularly, typically every 2-3 years or when your deal ends, to ensure you’re on the best terms.
Ready to Explore Your options?
Remortgaging isn’t just about switching lenders – it’s about making sure your mortgage still works for you. By reviewing your mortgage and exploring better deals, you could reduce your monthly payments and save a significant amount over time.
Ready to see how much you could save? Our expert team at Financial Fortress is here to help. If you’d like to discuss your mortgage options, you can contact us directly, or email your details to contact@financialfortress.co.uk and a member of our mortgage team will be happy to get in touch with you.