Re-mortgages – To “Re” Or Not To “Re”

If you have a mortgage on your home or business property then the recent cut in interest rates by The Bank of England would be welcome news in case you have taken a variable interest mortgage. However, there could be various factors, which could make you have a look towards the remortgage scene. A remortgage could offer you significant benefits if your property has appreciated dramatically over the last few years. If you need some cash then you could go in for a remortgage. You could go in for a longer term and thus would have to pay lower installments. If your credit rating were quite good, then you would not have any problem in a remortgage on your property. Even if your credit rating has slipped and you are in dire need of money, a remortgage can bail you out. This will offer you a chance to clear off your other debts and in case you have increased the duration of your loan, you would also have to pay smaller installments but over a longer period of time and also with a lot more interest. This move will increase your credit rating and will also give you a chance to clear off your other debts so that you can concentrate on only one loan. Another way to speed up your mortgage payments is to start pre-paying or overpaying your mortgage payments, if your lender does not have a penalty clause. Many lenders now allow borrowers to overpay upto 500 pounds per month while others have set an upper limit of 5000 pounds in a year. You can take advantage of every drop in interest to clear your mortgage by utilizing that extra money to clear your mortgage faster. The cost of shifting your mortgage should also be considered before making a move. There will be revaluation costs to revalue your property, penalties to be paid to your old lender to exit out early, arrangement fees when you enter into a new arrangement with your new lender and your attorney’s fees to get your documentation done. You will need to add up these fees along with the new interest rate applicable to you and then compare it with what you are presently paying. If you do not have any choice due to cash constraints and if you feel that this remortgage deal will give you some breathing space then go for it, but if there is no noticeable difference between the two then it is better to stick to your existing mortgage. So, either way, take the advice of a good mortgage broker and your attorney before making any decision. Any hasty move could turn your remortgage into a ‘remorsegage’.

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