The Need To Remortgage
As with any borrowing, it goes without saying that you should think carefully before embarking on it
. When borrowing is secured against your home, you need to be especially careful and make sure that you can keep up with the payments; otherwise you may end up losing your home.
Remortgaging your home is an option to consider for a number of reasons; however it is only a choice, and is never obligatory.
Income Changes
If your circumstances have changed, for example your income has decreased due to illness, redundancy or personal issues; you may find yourself in a situation where you are unable to keep up with your mortgage payments.
In this case you can approach your lender to see if there are any alternative suggestions that they have. If your income is likely only to be affected in the short term, they may be able to give you a remortgage payment holiday as an alternative; such holidays are common with flexible remortgages. Similarly, they may be able to adjust the terms of your current mortgage rather than you securing a new one instead.
Depending on how much of the mortgage you have already paid, your lender may be able to offer you a range of alternatives.
Costs
When you remortgage, you acquire a new mortgage and use the funds from this to pay off your current mortgage. There are often costs associated with doing this, for example legal fees and charges for ending your mortgage deal early. It is therefore the case that you should only remortgage when there is a compelling reason for you to do so.
Payments
A remortgage can reduce your monthly repayments, and sometimes the term of the deal as well. Many people look to remortgage for this reason, however its best to work out as far as possible what the financial impact of changing will be, which you can do using a remortgage calculator.
Funds
Many people also remortgage to obtain funds, either through releasing equity or obtaining further lending on the property. If this applies to you, you should think carefully about what the funds are for and whether remortgaging is definitely going to be worth your while.
If youre considering remortgaging to consolidate debts, it really is best if you take the time to calculate the impact of the remortgage on your finances. Look at your current outgoings, now and after any future rate changes, plus the length of time your debts will likely take to pay off, and compare these to the same factors if you secure the remortgage, and only go ahead if itll leave you in a better financial state. If youre struggling with debt at the moment, the last thing you need is a remortgage deal that ends up putting you under even more pressure.
by: Rob Prime
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