Re-Mortgaging 101: A 5 Step Guide
Re-Mortgaging is the subject of the following guest post from a financial writer looking to offer their insight into the often confusing world of re-mortgaging.
Interested in guest posting or writing a sponsored post? Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment.
Remortgaging the hows and why?
Are
you looking for a way to consolidate your debts and start fresh? Do smaller
mortgage payments appeal to you? Are the low interest rates making you want to
re-mortgage your home? If you’ve answered yes to any of these questions, you
may want to consider a re-mortgage. As of October, 2013, British lenders
approved more mortgages than they have in the past five years, according to the
daily commuter paper, City A.M. With borrowing costs at their lowest, one might
think it’s also a perfect time to re-mortgage. However, before you take this
big step, here are a few tips to help you make a sound and financially stable
decision.
1. Inquire about Early Repayment Fees - When you got your first mortgage, did the lender indicate there would be an early repayment charge or an early redemption charge? If so, how much will you be required to pay? If the amount is too high, you may be better off staying right where you’re at. The purpose of getting a re-mortgage, like one of the deals from Clydesdale Bank, is to save you money not cost you more.
2. What Kind of Fees are Involved? While it’s nice to think a re-mortgage will not have additional fees, this is not always the case. There may be exit fees, arrangement fees or closing fees. Before you consider signing on the dotted line, find out how much you’ll be paying in fees outside of the actual mortgage amount.
3. What is the True Rate? Generally, one of the first thing homeowners look for is low interest rates. However, make sure you know what the true rate is going to be over the life of your mortgage. Find out what kind of a standard variable rate (SVR) the lender is offering. Also, is it just an initial low SVR that will increase to a much higher SVR in the future? If this is the case, you may want to reconsider re-mortgaging or find a different lender.
4. Is Consolidating Debts Saving You Money? Many people use a re-mortgage as a way to consolidate other debts such as consumer loans or credit cards. Although rates are lower on mortgages than on other debts, make sure you’re really saving in the long run. While small debts have high interest rates, they’re also paid off within a couple years, unlike mortgages which typically go up to 25 years. If you have a lot of other debts, you may be paying more over 25 years. Do your math first.
5. Shop Around - If you were purchasing a car, you’d probably shop around for the best deal. Do the same with a re-mortgage. Check out as many British lenders as you can to find out who’s willing to give you the best deal. After all, the whole purpose of a re-mortgage is to save you money.
1. Inquire about Early Repayment Fees - When you got your first mortgage, did the lender indicate there would be an early repayment charge or an early redemption charge? If so, how much will you be required to pay? If the amount is too high, you may be better off staying right where you’re at. The purpose of getting a re-mortgage, like one of the deals from Clydesdale Bank, is to save you money not cost you more.
2. What Kind of Fees are Involved? While it’s nice to think a re-mortgage will not have additional fees, this is not always the case. There may be exit fees, arrangement fees or closing fees. Before you consider signing on the dotted line, find out how much you’ll be paying in fees outside of the actual mortgage amount.
3. What is the True Rate? Generally, one of the first thing homeowners look for is low interest rates. However, make sure you know what the true rate is going to be over the life of your mortgage. Find out what kind of a standard variable rate (SVR) the lender is offering. Also, is it just an initial low SVR that will increase to a much higher SVR in the future? If this is the case, you may want to reconsider re-mortgaging or find a different lender.
4. Is Consolidating Debts Saving You Money? Many people use a re-mortgage as a way to consolidate other debts such as consumer loans or credit cards. Although rates are lower on mortgages than on other debts, make sure you’re really saving in the long run. While small debts have high interest rates, they’re also paid off within a couple years, unlike mortgages which typically go up to 25 years. If you have a lot of other debts, you may be paying more over 25 years. Do your math first.
5. Shop Around - If you were purchasing a car, you’d probably shop around for the best deal. Do the same with a re-mortgage. Check out as many British lenders as you can to find out who’s willing to give you the best deal. After all, the whole purpose of a re-mortgage is to save you money.
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