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Remortgage To Save Money

Jun 2, 2008
Mortgage payments are the largest expense in a typical UK household. It therefore makes sense to ensure that you are getting the best deal possible on your home loan which means that you should remortgage if necessary. In this day and age of rising household bills it is vital to ensure you save money where you can and your mortgage is a good place to start.

If you are paying interest on your mortgage at the lender's Standard Variable Rate (SVR) then you are probably paying more than you should be. The SVR is the highest rate you can be subjected to. Most lenders have products with discounted rates that are useful for helping borrowers save money on their monthly repayments. Mortgage lenders are always looking to attract new customers and regularly offer discounts and other incentives to potential remortgage customers.

You should review your mortgage situation at least once a year and if necessary employ the services of an independent advisor to give you an expert opinion on whether or not to remortgage to a different product. New deals are constantly being added to the market so it is wise to review your situation regularly.

However, a remortgage is not always the best course of action to take, as they can come with hefty fees. Therefore your first task after evaluating your existing home loan is to contact your current lender and find out if they will offer you a lower interest rate to stay with them.

Your current lender may be open to your proposal, especially if you tell them that if they cannot offer you a more competitive rate you will simply refinance to a different lender. If your current lender agrees to your proposal, you may save yourself time and money by not having to switch to a different lender.

However, if they do not offer you a better deal, you should compare your current home loan to any other suitable remortgage products on the market that you qualify for. This is where an independent mortgage broker can help. Independent advisors have special software that can scan the entire remortgage market, saving you the time it would otherwise take to conduct the research on your own.

If you do decide to remortgage, remember to account for any fees that may become payable, such as application fees to the lender and broker and solicitor fees. If the overall expense of paying these fees outweighs the benefits of a lower interest rate on the remortgage product, it may be a better idea to stay with your current product.

If you would like to remortgage your property, you should therefore perform a cost-benefit analysis to ensure you make the right decision for the long-term. Be sure to evaluate the situation yourself after you gather all the information you can from your mortgage broker. The broker may want you to remortgage so they can earn a commission however this may not be the best option for you. Be sure to make the right decision based on your own personal financial situation.
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