Remortgaging or refinancing your house is not so uncommon these days and most often, the reasons for doing it also seem to be quite viable too. Refinancing or remortgaging means changing your present mortgage to another one may be even a different provider in order to avail the benefits of better options.
You might want to change your mortgage for a number of reasons, some of them being change of your circumstances, availability of other lower interest loans or better options. All of these and many other reasons seem enough to make a decision to remortgage. However, before you do it, take a look at the following considerations that you need to make.
Consider any charges
Most often, lenders include prepayment penalties in their loan conditions. Therefore, you should first check your loan documents to see if there are such penalties or charges attached to your loan. If they are then you might have to calculate your penalties and the difference in the interest between the two loans. This will help you decide if paying the penalties is a better option.
Consider any fees
Taking out a new mortgage will include fees. You have to do that calculation also. Include the fees of a surveyor for valuation, solicitors’ fees as well as any other extra fees that you might have to pay. Some deals also offer cash so that you can cover any costs or even fee-free deals. You should calculate and decide based upon the difference.
Consider the features
Sometimes, people change loans also because they are more comfortable with the new loan terms compared to their previous one. They might want more flexibility or less flexibility, basically different terms that suit their needs. Therefore, consider all the features along with any extra charges or fees.
Consider the equity of your home
If your house has become more valuable or more expensive over the past years then you might want to remortgage for the simple reason of releasing the equity of your house as cash. Now, there will be some limits as to the amount that you will be able to borrow. That will mainly depend on the property value as well as your income.
If you are retired then there are schemes for equity release for you. You can access cash or get an income regularly based upon the value of your home. In other words, your sell your house to them and yet they give you the right to stay in your house until you live.