Remortgaging to Release Money
If you’re a homeowner, your property is probably your biggest asset. Being a homeowner doesn’t always come easy as you probably don’t own your house in its entirety. This is where having a mortgage in place comes in.
So, you’ve taken a mortgage out on your lovely home and several years down the line you’d like to do a few home improvements.
But, where can you get the money to do so?
Remortgaging your current property can provide you with financial flexibility by taking out another mortgage, all whilst borrowing more cash in the process. This means that overall, you can switch to a new mortgage and maybe even get better interest rates in the process.
By getting a new mortgage, you can even borrow more money so you can make those home improvements you’ve always wanted or choose to do with the money as you please.
Your best bet is to get in touch with a financial advisor to go over the finer details, but for now, here is a breakdown of remortgaging your property to release money.
What is remortgaging?
The basics of remortgaging are simply switching your current mortgage to a new one. And it really can be as simple as that, with the right financial advice.
Whether this be with your current lender or a new one, anything is possible.
You may be thinking, why remortgage when you already have one in place, but there are many reasons why people do and what it can mean for you.
As said before, a new mortgage can free up some cash and therefore you can make any home improvements you desire.
Remortgaging is also a popular way of releasing equity from your property to gather a cash lump sum, in order to consolidate any existing debts.
It’s only natural that your property is going to go up in value over time, and if you’ve been paying your mortgage for a fair few years then you’re more than likely eligible to take some money out of your property’s equity.
By remortgaging with a new lender, this is a possibility when you change the terms of your new mortgage.
It should be noted that in the long run your mortgage payments may increase, as in theory, you’re basically taking out an additional loan for taking the equity out.
But before doing so, it’s always best to do your research on your current financial circumstances to see if remortgaging is right for you.
1. Find out the worth of your property
Before you consider taking any money out, it’s always wise to see what your property is worth. It’s interesting to see what the value of your property has become and then a financial advisor can calculate the equity you could possibly take out to release money for
2. Check what you owe
By calculating what you’ve already paid and what you owe, you can then discuss what equity you can take out going forward. This can be done by going over your mortgage statement or asking your lender for a redemption statement.
3. Decide what type of new mortgage you’d like
Some people remortgage simply because the end of their current mortgage terms have come to an end and they wish to find a better rate. By looking into a new deal, this could potentially save you money. Going forward, it’s wise to look into the new type of mortgage you wish to sign up to, whether this be interest only or a repayment mortgage. Again, this could mean you pay slightly more back in the long run, but for your current financial circumstances, it could help reduce your living costs.
4. Check it’s actually going to benefit you
The more equity in your property, the more likely you are to receive the most competitive rates. If your property value hasn’t gone up and you haven’t paid enough off, you have to ask yourself if this really is the right method of borrowing money when you could just get a loan. As remortgaging could end up costing you more in the long run, you have to weigh up the pros and cons before considering such a big switch.
If all of the above have gone smoothly then now is the time to get in touch with a financial
advisor and make it happen. The application process doesn’t need to be daunting, whether
you’re sticking with your current lender or switching to a new one.
Once it’s all finalised, the new mortgage funds will be transferred to cover your old ones and
you can be ready to spend your lump sum you’ve requested.
The advantages of remortgaging
If you’re still on the fence about whether you should remortgage or not, then do think about it logically.
It is a big financial decision to make and not one that should be made lightly.
To help put your mind at ease, here are a few pros of remortgaging your property.
- Borrowing at a new lower interest rate to what you are paying now
- The ability to release equity from your home to consolidate debts or make home improvements
- Using equity to receive a cash lump sum
- Switching to a new deal that is more suitable for your current financial situation
- If your current deal is about to end, remortgaging can assist with this and we can help you find a new one
- If your properties value has dramatically increased, it’s worth using the benefits of this
- If you want to overpay and your current lender won’t let you, then why not switch
- You want to switch from an interest-only mortgage to a repayment method
- You simply just want to borrow more money.
For whatever reason you wish to remortgage, always seek the advice of a financial advisor
to see what the best options are available for you.
If remortgaging isn’t something you wish to do then alternative options are also available.
When should you remortgage?
The best time to remortgage is when the value of your house has gone up.
This will then provide you with more equity.
If you don’t know a great deal about your current mortgage policy, have a look at when it is due to end on your current rate.
The best time to consider a remortgage move is approximately 3 months before your current deal is due to end. This ensures you will have enough time to research and go through the application process.
Do you need a solicitor to remortgage?
Depending on how smoothly the transaction is, you don’t ultimately need a solicitor.If you are remortgaging with your current lender, it can just be a simple money transfer and therefore no legal work is required.
However, if you are switching lender and releasing equity, you may find yourself needing someone to finalise the legalities.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.