Are you one of the many homeowners whose mortgage term is nearing its conclusion? As you approach the end of your current mortgage deal, it’s essential to explore the incredible benefits that remortgaging can offer.
Remortgages
How to Refinance Your Mortgage
Your home may be repossessed if you do not keep up with payments.
We recommend choosing a plan that suits your financial comfort and long-term stability.
What is a Remortgage?
A remortgage, also known as refinancing, is the process of switching your existing mortgage to a new lender or renegotiating the terms with your current lender.
Unlike a mortgage for purchasing a new property, a remortgage is specifically designed for homeowners who already have an existing mortgage in place.
By doing so, you can take advantage of better interest rates, access additional funds, or consolidate debts, among other potential benefits.
How Does a Remortgage Work?
When you initially secured your mortgage, the terms and interest rates were based on various factors, such as your credit score, the property’s value, and prevailing market conditions. Over time, these factors can change, and so can the mortgage products available on the market. This is where remortgaging comes into play.
When you decide to remortgage, you’ll need to assess your current financial situation and your long-term goals. If you find a better mortgage deal with lower interest rates or more favourable terms, it may be a great time to consider a remortgage. Additionally, you can release equity tied up in your property to fund home improvements, investments, or other significant expenses.
Benefits of Remortgaging
Whether you’re looking to save money, access funds, or consolidate debts, understanding the perks of remortgaging will empower you to make informed decisions about your home’s financial future.
Reduce Monthly Repayments: One of the primary reasons homeowners consider remortgaging is to secure a better interest rate than their current mortgage. As market conditions fluctuate, so do mortgage rates. If you find that the current interest rates are lower than what you’re paying, remortgaging can allow you to switch to a more favourable rate, reducing your monthly mortgage repayments. Even a slight decrease in interest rates can result in substantial savings over the life of the loan.
Access to Equity: If a property’s value has increased since its purchase, it may have accrued equity. Remortgaging provides an opportunity to release this equity and access a lump sum of money. The funds can be used for various purposes, such as home improvements, financing a child’s education, starting a business, or fulfilling personal aspirations. It is important to utilise this capital responsibly, and professional guidance is available to help explore the most suitable options for individual circumstances.
Debt Consolidation: Dealing with multiple debts, such as credit cards, personal loans, or store credit, can be overwhelming. High-interest rates on these debts can make it difficult to manage your finances effectively. Remortgaging allows you to consolidate your debts by rolling them into your mortgage. By doing so, you’ll have a single, more manageable monthly payment at a potentially lower interest rate. Debt consolidation through remortgaging can offer both financial relief and better control over your overall debt.
Switching to a Fixed-Rate Mortgage: If your current mortgage has a variable interest rate, you may be exposed to fluctuations in your monthly payments based on changes in the base rate. Remortgaging gives you the option to switch to a fixed-rate mortgage, providing stability and predictability in your monthly repayments. With a fixed-rate mortgage, you’ll know exactly how much you need to budget for each month, making it easier to manage your finances with confidence.
Access to Better Mortgage Features: As the mortgage market evolves, new and improved mortgage features and products become available. Remortgaging gives you the opportunity to take advantage of these features, such as offset accounts, flexible repayment options, or the ability to overpay without penalties. Evaluating and comparing different mortgage products can help you find the most suitable one to meet your current and future needs.
A personalised approach to your mortgage journey
With an SZ Financial Services Ltd adviser providing personalised support, the mortgage process becomes more manageable and less time-consuming. All aspects of securing the most competitive mortgage rates are handled efficiently, allowing time to focus on other priorities—whether preparing for a new home or benefiting from the financial advantages of a remortgage.
Remortgage FAQs
Remortgaging is possible at any time; however, doing so before the end of a fixed-rate term may incur an early repayment charge. Fixed-rate mortgages typically last for two, three, five or, in some cases, ten years. Once this period ends, the mortgage usually reverts to the lender’s Standard Variable Rate (SVR), which often carries higher interest rates.
By remortgaging, it may be possible to secure a more competitive interest rate than that offered on the SVR, potentially reducing monthly repayments and overall costs.
In some cases, remortgaging may not be financially beneficial. At SZ Financial Services Ltd, a dedicated adviser will assess your individual circumstances to determine whether remortgaging is a worthwhile option. Early repayment charges can amount to several thousand pounds when switching lenders, so it’s important to weigh the potential savings against the associated costs.
If your circumstances have changed since your initial mortgage application, working with a knowledgeable broker can improve your chances of securing a suitable remortgage. Even with a poor credit history, remortgaging remains possible—though mainstream high street lenders may be less accommodating.
SZ Financial Services Ltd provides access to a wider network of lenders, including those not typically available through traditional channels, helping to identify options that align with your current financial situation.
Loan-to-Value (LTV) represents the ratio between the size of your mortgage and the value of your property.
For instance, if your property is valued at £200,000 and you have £150,000 remaining on your mortgage, your LTV would be 75%.
Generally, a lower LTV can give you access to more competitive mortgage deals, as it represents lower risk to lenders.
When you initially secured your mortgage, it would have been based on your property’s value at the time. As UK house prices have generally risen over recent years, there is a strong possibility that your home has increased in value.
With rising property values, you are likely to have built up greater equity in your home. But how can that equity be accessed without selling the property?