Remortgage to save money, consolidate debt or release equity

The main reasons people remortgage are to save money or release equity. Homeowners can effect this in one of two ways; they can either:

• Remortgage their current property with a new lender;
• Using a product transfer, switch their current mortgage to a new one with their existing lender.

Either way, homeowners must begin the process 4-6 months before their introductory rate comes to an end. That’s because, after the introductory rate period expires, borrowers switch to their lender’s SVR.

Most times, the interest rate on the SVR is much higher. Acting early will ensure a remortgage completes before the lender’s legacy interest rate kicks in.

Never pay too much for your mortgage again

Too many homeowners in the UK settle for a new SVR and never consider switching mortgages. Sometimes, that’s because a remortgage doesn’t always make financial sense or isn’t possible for other reasons.

But, we’re upfront with you all the way. If remortgaging’s not right for you, we’ll tell you so. But you’ll never know how much you could be saving on your repayments if you don’t check the market.

Our main objective at Mortgage Quest is to ensure that you never pay more than you need to. Here are the most popular reasons people choose to remortgage with us:

Avoid switching to your lender’s SVR wherever possible

When your introductory rate period ends, your lender will transfer you to their base rate, or SVR. It rarely matters if your introductory deal is a fixed, tracker or discounted rate. The SVR is often much higher than the introductory rate of your mortgage.

If you remortgage, you’ll avoid the punitive new rate and reduce your monthly payments.

You need to release equity from your home

In a steady economic climate (remember those?), property increases in value. That includes residential properties, so your home becomes worth more over time. Remortgaging to the new value allows you to release equity for any number of viable reasons:

• home improvements, like a conservatory, new kitchen or bathroom;
• investment property, like a buy-to-let deposit;
• help a family member with a deposit for a property of their own;
• debt consolidation*.

Increased property value may qualify you for better interest rates

Assuming that your home is worth more when you come to remortgage, you could find yourself in a lower loan-to-value band. This often means you’re a lower-risk borrower in the lender’s eyes. It could then avail you of access to even lower interest rates.

Our advisors can do the maths for you without affecting your credit rating. They’ll also ensure that your new mortgage takes the current value of your property into account. (Some lenders will only work off the value from your previous mortgage!)

It’s always worth considering a remortgage, even after just a 2-year fixed deal. If it’s with the same lender (product transfer), you could benefit purely from the increased equity in your home.

*Using a remortgage to consolidate debt

If you choose the right mortgage, remortgaging to pay off debt can improve your situation. Having an advisor on side who has access to the whole market is key to finding the best deal for you.

There’s a lot to consider, like whether you’ll be better off over the short- and long-term. Any debt paid off will be spread over the lifetime of your new mortgage. But you’ll often have more monthly disposable income.

Whether remortgaging or product switching is right for you will depend on what’s most important right now. Our advisors can put any queries you have into figures to help you make that decision with confidence.