FISCUS MORTGAGES - INFORMATION AND ADVICE

Advantages of a Remortgage

Getting a better rate - This is the obvious advantage of remortgaging, especially if it has been a few years since you last reviewed your mortgage. You should almost certainly be able to move to a more attractive rate compared to the one you are presently on. Make sure that you tell your existing lender that you are considering remortgaging, so that they can have the opportunity to come up with a competitive offer to keep your business. If you want to get a better idea of remortgage interest rates, we suggest you take a look at our remortgage tables.

Taking advantage of an improved credit score - This is more applicable if you have had credit problems in the past, or if you are a first-time buyer. Providing you have had a year of making your monthly mortgage payments on time, then you may now be viewed by financial institutions as a much better credit risk than you were before you moved.

This is particularly important for first-time buyers who have moved away from their parents’ home, as the financial responsibilities of home ownership are much more substantial compared to living with parents. Although it takes six years for the complete removal of any CCJ or other serious credit problems, as each year passes, you are more likely to move away from being penalised by banks that see you as a high credit risk.

Debt consolidation - This is perhaps the most popular reason for remortgaging. If you continue to pay out different amounts on your loans, credit cards and overdraft repayments, these are virtually always going to be at a higher interest rate than your mortgage. Even if you are able to take advantage of special offers, such as 0% interest credit card balance transfers, these tend to only provide short-term solutions. Consolidation therefore has the double advantage of reducing your monthly loan repayments and reducing the interest rate you pay.

Many debt-consolidation schemes come across as very attractive, helping borrowers to reduce monthly outgoings and maintain credit ratings if repayments are made on time, they can have their drawbacks. Firstly, as it is secured against property, your home is at risk if you do not keep up repayments. Secondly, although the interest rate falls, the repayment period increases and this means that overall interest may remain the same or possibly even increase. When it comes to debt consolidation, you must not expect a remortgage to solve all your problems; you must address the underlying issues that led to the accrual of the debt in the first place, in particular your outgoings.

Changing the type of interest paid - If you are concerned about the potential for a rise in interest rates, you may prefer to remortgage to a deal which offers a capped or a fixed-rate product. You may also find that a mortgage which allows you to make additional payments or to take repayment holidays offers useful advantages. These are known as flexible mortgages.

Staying financially focused - For most people, their house is by far their largest asset and mortgage repayments are usually the largest outgoing after income tax. Staying on top of changes in interest rates and different mortgage packages which are available can enable you to stay focused on your most important financial commitments. This can then give the opportunity to make sure that you have the best deals on other areas as well. Once you have looked at your mortgage package, you might want to consider other financial factors, such as credit card interest, investments and pension payments.

Paying off your mortgage sooner - A remortgage deal may allow you to pay off your mortgage earlier by keeping your repayments the same but reducing your interest rate. Alternatively, you may be able to move to a flexible mortgage deal which allows you to make lump-sum payments or make larger monthly repayments, thus bringing forward the repayment of your mortgage balance.