The Many Good Reasons Why A Remortgage Is The Best Financial Choice
There are lots of reasons that people remortgage. Some want to secure a better deal on their home loan whilst others want to free up some cash for other purposes – sometimes known as a remortgage and further advance. Our guide examines the various reasons why you might wish to remortgage.
Home Improvements: Most homeowners would make improvements to their homes if they had the time and money, but many lack the capital to invest in new kitchens, bathrooms and conservatories. It is an excellent way of adding value to a property and of investing in an asset that is going to appreciate in value, especially when other investments seem too risky.
Home renovation can be a series of small improvements, like re decorating a room, or a major alteration such as refitting the kitchen or bathroom. You might even undertake something more radical like building a pool on the property. Big projects need to be carefully thought through however. Every property will have a ceiling price based on the neighbourhood it is in. There is no point spending £20,000 on a pool and expecting to add £35,000 to the property’s value, if you have an intercity railway line at the bottom of the garden.
A remortgage can also be used for improvements such as replacing your windows and doors. As well as helping you save money on your heating bills, new windows can be more secure and can increase the saleability of your home. And, if you need more living space you could use a remortgage to find the construction of a conservatory or extension.
Finding a Better Deal: Many home owners remortgage to access a better mortgage rate. For example, if the fixed rate mortgage that you currently have comes to the end of its fixed rate period, you might want to get a remortgage to access a fixed rate deal rather than returning to the previous standard variable rate.
Another popular home improvement is adding an extension to the home, either as a conservatory or as additional brick rooms. This can allow for a larger kitchen or adding new bedrooms on which can dramatically increase the value of your home.
Debt Consolidation: If you have balances on credit cards or personal loans it can be beneficial to remortgage in order to repay these debts. It can reduce the interest rate that you pay as well as reducing your monthly outgoings. Remember that you may end up paying more interest in total as the loan will be taken out over a longer period.
In the short term, remortgaging to consolidate debts can significantly reduce your outgoings. A remortgage will be charged at around 5-6% whilst many credit cards attract interest rates of 20% or more. Personal loans are often at interest rates of 10% or more.
When remortgaging it can be worthwhile calculating exactly what you would save in the short term and how much you would pay in the long term. If you are unable to do this, a mortgage broker or financial advisor may be able to help you.
Purchases: Another reason for remortgaging is to raise capital to fund a large purchase such as a car or motorbike. Remember that the debt will be payable over the remaining term of your mortgage whilst the asset that you buy may depreciate in value in the short term.
Timothy Frodsham writes for JustRemortgages.com one of the UK’s
top sites for the latest remortgage rates and best remortgage deals.