Your home is probably the most significant purchase you'll ever make, yet it's surprising how many people simply continue paying their mortgage every month without thinking too much about it. However, there's no reason to stick with your current deal if you're unhappy with it - and refinancing can often dramatically improve your daily finances. Here are four compelling reasons to consider a remortgage.
Receive a Better Rate
When you took out your mortgage, you were probably quoted a beneficial rate in a bid to earn your business. However, as time goes on you'll probably find the interest edges upwards - there's usually little reward for loyalty, and the most attractive deals will generally be given to new customers. However, a remortgage gives you the opportunity to negotiate a lower interest rate and therefore more affordable monthly payments, whether you stay with your current mortgage provider or move to a new one.
Change the Term
Lengthening the term will reduce your monthly repayments at the cost of more interest being paid overall. If your finances have taken a turn for the worse since you took the mortgage out, this can potentially make the difference between staying in your home or being forced to sell. The other side of the coin is that shortening the term will increase your payments but see you free of your mortgage more quickly, potentially saving a considerable amount of money along the way. Either way, a mortgage refinance gives you the flexibility to reorganize your finances around your primary asset.
Switch Mortgage Type
Economic conditions change over time, and this is reflected in fluctuating interest rates on typical mortgages. When you first bought your home, you may have opted for the security of a fixed-rate deal, but this may no longer be the most cost-effective option. Switching to a a variable-rate mortgage could let you take advantage of current low base rates. On the other hand, if you currently have a variable-rate deal, you may feel now is a good time to lock in a low rate by switching to a fixed deal.
Whether for home improvements, debt consolidation, or simply to take advantage of real estate price rises to get a little extra cash, if your outstanding mortgage is significantly less than your home's value you can unlock the difference with a remortgage. By taking out a larger loan, you can pay off your existing debt with some money leftover to spend how you like - and if you get a better mortgage deal in the process, then all the better.
A home loan is probably the biggest single financial commitment most people have in their lives. However, your current deal is not necessarily set in stone. Assessing your options and switching to a more appropriate package could give your finances a welcome boost for relatively little effort, so why not consider applying for a remortgage?