Remortgaging is a good way to escape high variable or fixed rates and take advantage of some of the current fixed rate or discounted mortgages, which have much lower rates. It is also a great way to raise funds for the purchase of an investment property. If you have owned your property for several years it could be worth much more that your outstanding debt. By taking out a new mortgage, you can release money.
Are you unsure if remortgaging is right for you? Our five-point plan will help you make up your mind.
- Write to your existing lender and ask for a written redemption statement. This will indicate the exact out-standing balance of your loan and will show any penalties or fees for redeeming your mortgage.
- Calculate what the legal fees involved will be. These will vary according to the value of the property and the solicitor used.
- Look at the new mortgage offer, including the small print, and ask for a written statement of what your new repayments will be, showing any discounts and all the costs that will be incurred, such as the MIG premium and arrangement fee.
- Work out how much you will save each month by subtracting the repayment for the new loan from the old repayment - don't forget to take the standard variable rate that the new loan will revert to into consideration as well, particularly if the discounted or fixed rate applies only for a brief period.
- Compare the costs with the savings - but don't forget that the costs will be payable up front while the savings will accrue over a period of time.