How does remortgaging work to release equity from your home?
Remortgaging your home is a way to release equity, get a better rate or borrow more money against the value of your home. It involves taking out another mortgage on your property with a new lender. There are many reasons why someone might want to remortgage their home, and there can be positives and negatives in doing so.
Here, the expert remortgaging conveyancing solicitors at Clough & Willis explain how remortgaging works to release equity from your home, and detail some of the reasons why remortgaging might be right for you.
How does remortgaging work?
When you remortgage, you take out a second mortgage on your home. Usually, you will use some of this money to pay off your first mortgage, so that you still only have one mortgage to pay. There will often be an early payment fee associated with paying off your mortgage in a single payment, but this will depend on how much of the mortgage you have already paid off, and possibly other factors.
Nevertheless, if you secure your new mortgage at a significantly better rate, you will still be able to save money in the long term, even if you are subject to an early repayment fee. However, you should calculate this properly and determine whether it is going to be worthwhile, as an especially large early repayment fee can cancel out any savings you would make, or reduce the total amount you can borrow.
Why should I remortgage my home?
There are many factors to consider when remortgaging your home. It can enable you to borrow more money, or offer a better deal on repayments. Even if you are comfortable in your current financial situation and don’t feel the need to borrow any more, there are other reasons to consider, including saving money and potentially benefiting from any increases in the value of your home since you bought it.
You may be able to save thousands of pounds every year by remortgaging your home. If your mortgage has a fixed rate or discount associated with it, this will run out after a few years and your rate will revert to the standard interest rate offered by your creditor. By remortgaging, you can benefit from a lower rate than the standard interest rate for your new mortgage.
In addition to maintaining a low interest rate, you might also be able to get a better deal on repayments, and streamline your debts to make them easier to manage. However, if you are already on a good deal, or you only have a small amount left to pay off your mortgage, this may not be the best option. It is also worth considering that if you have had credit problems in the past, you may struggle to secure a new mortgage, so this is another factor to take into account.
At Clough & Willis, our remortgaging conveyancing experts can help to guide you through the process of remortgaging your home. Should you decide to remortgage, we will make it as simple and stress-free as possible to move your mortgage to a new lender.