What To Consider Before Deciding To Remortgage

*This is a collaborative post on what to consider before deciding to remortgage

If you’re one of the 65% of households that own their own home in the UK, then chances are, you’ve got a mortgage. But did you know that by staying with the same provider, you might be missing out on the best deal? 

One way to save some money amid rising living costs is remortgaging. But it’s not a decision to be taken lightly. Here’s what you need to consider before taking the plunge and changing mortgage lenders. 

What is remortgaging?

At a basic level, remortgaging your home involves moving your mortgage from your existing lender to a new one. One of the main reasons do this is to bring down monthly payments by securing a better deal. 

Some other benefits include: 

• More certainty (if switching to a fixed rate)
• You might be able to pay off your mortgage sooner
• You might be able to borrow more money
• Debt consolidation

What to consider before you remortgage?

Your credit score

Like many things in life, whether you can remortgage depends on your credit score. Your new lenders will do a credit check before they agree to a mortgage. As part of this, they will look at your past credit cards, overdrafts, and regular bills. 

If your credit score isn’t looking too great, you may wish to take steps toward improving your credit score before you apply. 

Interest rates for your remortgage

If the Bank of England increases the base rate, this might hurt your mortgage payments if you’re on a variable rate. If this sounds familiar, you might want to swap onto a fixed rate so you can ‘lock in’ your monthly repayments. 

If you’re remortgaging and have found a great-looking variable rate, be aware that this could increase. 

Home value

If your home has increased in value, then remortgaging can save you money in the long run. But be warned – you probably won’t be able to get the same deal if your home has decreased in value as your loan-to-value ratio will be higher. 

Your current deal

Although it doesn’t hurt to shop around, sometimes the grass isn’t greener on the other side. It might be that you can’t get a better deal than the one you’re on at the moment. 

But it doesn’t hurt to look around so that you know you’re getting the best possible deal. 

Should you remortgage?

The answer is simple: it depends. 

If interest rates fall and there are signs they might be going up soon – and you’re not on a fixed rate – it might be a good time to remortgage to lock in lower monthly payments. But whether remortgaging is right for you will depend on your credit score, your financial circumstances, and things like early exit fees for leaving your current deal.