There are various ways to save money by remortgaging or refinancing. With a remortgage, you will be taking out a new mortgage loan in order to pay off the old one. When you remortgage your house, you pay it off 'early' with the money you receive from a new mortgage, using the very same house as security. Homeowners do this for different reasons. The most common reasons for doing this include capital raising, to get better interest rates or APR, to lower repayments, to change the type of mortgage and to change the deal so that they can pay off the mortgage loan sooner. But to make sure you get the maximum benefit from remortgaging there are some things you need to know.
Know the best time to remortgage.
Consider remortgaging your mortgage if it will save you money in one way or another and if you plan to keep the new mortgage for several years. You can get a rate that is at least lower than your existing mortgage rate. Provided you do not have early repayments penalties or charges that would negate the benefits, you can take out a new loan and pay off the old one. If your existing mortgage has penalties or charges for paying it off early, you may want to consider whether the benefits of getting a new loan outweigh the cost. Also, consider the extra fees and costs for the new mortgage. You may have to pay broker fees and legal fees too.
Be smart about dropping one mortgage for another.
Transferring the mortgage to another mortgage lender can give you a lower interest rate and raise some much needed capital, but find out how long the new interest rate will last and how much it will change after the special discount period is over.
Look into consolidating more expensive loans.
If you have multiple loans such as secured loans and expensive credit cards, consider the potential benefits of consolidating them into one new remortgage loan at a lower interest rate. Compare the costs, rates and terms. It may not be worth consolidating the multiple loans if it means losing a good mortgage deal with a lower fixed-interest rate or running up other costs that would exceed those on your existing loans.
Coming to the end of a special Deal? Negotiate a better offer.
If you're about to come to the end of a special deal, it is likely that the lender will move you to their standard variable rate. Find out what that is and how much you will be paying so that you can shop around for a better deal. After you have found a good deal, it's worth going back to your current lender to see if they will offer you a similar or better deal to keep you as a customer. Many lending institutions have various options available when your existing deal comes to an end but you have to ask. This will save you the hassle of remortgaging and will also save you some money too as you will not have to pay all those costs.