Is Remortgaging Right for You? A Guide to Weighing the Pros and Cons
Remortgaging is a lucrative option for several homeowners because the housing market conditions in Manchester continue to thrive.
Remortgaging is a lucrative option for several homeowners because the housing market conditions in Manchester continue to thrive. But before diving in, it is essential to find out if remortgaging aligns with your specific financial goals. Here is a breakdown of the benefits of remortgaging and potential drawbacks so you can make an informed decision.
Benefits of remortgaging
● Reducing monthly payments - Through remortgaging, you can secure a lower rate of interest, which can significantly decrease your monthly mortgage outgoings. This will also free up your cash flow and ensure you have enough left to be redirected towards investments, savings, or simply enjoying a comfortable life.
● Raising capital - By choosing the remortgaging route, you will be releasing equity from your property. This is going to unlock capital, and you can use it to finance home renovations, consolidate debts or even invest in future ventures to boost your financial well-being.
● Enhancing your mortgage deal - The terms of your existing mortgage may not reflect your financial standing. With remortgaging, you can allow yourself to switch to a more favourable product with better rates of interest and a flexible repayment structure.
● Preparing for the future - The different stages of life demand that you make adjustments to your finances. By remortgaging, you can plan a better financial future.
Although the benefits of remortgaging are lucrative, you must be aware of the potential drawbacks before making your decision.
Potential drawbacks of remortgaging
● Early repayment charges - Are you still within the introductory period of your existing mortgage deal? If so, you may have to incur early repayment charges. You must factor this into your calculations when determining your potential savings.
● Valuation shortfalls - Since the property market fluctuates, the value of your property might have decreased since the first time you took out a mortgage. So, if you are remortgaging, it might be to a lower loan-to-value bracket.
● Impact on your credit score - When you are applying for a new mortgage, it might result in a temporary dip in your credit score. But this impact is going to be minimal and you might be able to recover quickly.
● Remortgaging costs - You must factor in the fees that are associated with remortgaging, such as valuation fees, solicitor fees, and lender arrangement fees.
The bottom line
Remortgaging is a powerful financial tool but it isn’t a one-size-fits-all solution. Hence, it would be better if you discuss your pros and cons with the financial advisors at Identityfs. We can help you assess your eligibility and navigate the remortgaging process.