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For many
homeowners, refinancing is a chance for a clean slate and helps to make
monthly mortgage payments much more manageable. It can suit pretty much
everyone and can be a cost-effective way to make the monthly bills that much
more reasonable for you and your family.
The idea of taking out a
Refinance home loan
is that you set up a whole new mortgage with new terms, and you pay
whatever you can afford every month for your home. Maybe you've had some unexpected expenses crop up recently or you are needing money to pay for a child'd college education. They are just two of the many reasons you may choose to refinance your mortgage. If you are thinking
about doing this for yourself and your family this year, here are a few other reasons to do it.
1. Your current deal is closing
When we set up a mortgage with our lender, we are usually given two
different options for our monthly payments. We can either choose to get a
tracker mortgage which bases the interest of payments on the going rate
each month: or we can get a
fixed rate
which guarantees that the interest stays the same for a period of time. If
your fixed rate period is coming to an end, you will be put back on the
standard interest rate. This can cause you to pay more every month for
your mortgage. If you take the opportunity to remortgage before your deal
ends, you can get back on a fixed rate plan and have that stability for
longer. You’ll be able to pay the same rate for a period of two, three or
five years and not have to worry about the rates fluctuating every month.
2. You want a better deal
One of the simple reasons why people choose to remortgage their homes is
the fact that you can get a better monthly payment by doing so. When you
initially take out a mortgage you will have to pay a larger sum as an early
repayment. This can be a huge chunk of money to pay off, and even when you
finish paying off your mortgage or you want to buy a new home,
you will be charged an admin fee to exit. By remortgaging your home, you
will get a lower rate and avoid the exit fee.
3. Your home value has increased
When we first move into a home, the value will be whatever we paid for it
on our mortgage. However, as the months and years go by, the state of the
housing market
will change and your home will likely increase in value even if you haven’t
done anything to it. The key thing to remember in terms of your mortgage is
that when your home has a higher value, you can get lower monthly payments
in relation to it. Therefore, even though your mortgage might cost more in
the long term, it can be beneficial for you to remortgage your home when
the value rises.
4. Interest rates might go up
Interest rates can be a pain in the neck to deal with in any situation.
Most of us will always try to find the lowest interest rates we can. In relation
to your mortgage, if you have chosen a tracker mortgage instead of a fixed rate,
this means that your interest will change in accordance with the national
base rate. This can sometimes be a blessing in disguise when the rates
plummet to an all-time low, but often they will rise and this can make
monthly payments more difficult for many. If you are worried about the
direction in which the interest rates are going, you simply need to
remortgage and switch to a fixed rate. This will give you stability and
peace of mind to know that your interest rate isn’t going to change. If you
notice that the interest rate is going up with your chosen bank or lender
for new customers, this isn't going to affect you.
5. You aren’t able to overpay
Although we all talk about struggling with mortgage payments throughout our
lives, some of us have the opposite issue and want to be paying more every
month. When you take out a mortgage you have a standard rate which must be
paid back every single month. Some mortgages will offer you the opportunity
to pay extra money on top of your main fee in order to get ahead with your
payments and pay off the mortgage quicker. However, sometimes your mortgage
deal won’t cover this. If you have recently come into some money, it could
be that you want to simply get ahead with your payments and be able to
become mortgage free quicker. You shouldn’t have to remortgage for this,
your lender should change your deal to allow for extra payments: but if
they don’t you can make a new deal to allow you to pay more either every so
often or even every single month if you want to pay off your mortgage more
rapidly. But if you will want to pay off more every month, you could choose
a shorter term for your mortgage and do it this way instead.
6. You want to borrow more money
If you have a mortgage and you are looking borrow extra money for
home projects and repairs, a new addition, or to build the outdoor kitchen of your dreams, you can ask your bank to add the
money onto your mortgage and in turn make a deal for lesser monthly
payments. Be aware though that your bank will ask you what the money is
for, and you shouldn’t borrow it for things that don’t have anything to do
with your home. Trying to borrow money for a holiday, starting a business
or buying some new decorations for the house won’t be acceptable. Make sure
that you have a good reason to borrow the money before you go to your bank.
7. You want a flexible deal
Mortgages come in many different forms, and the most standard ones we
usually head towards are not the only options out there for repaying our
home. Mortgages are not all clean cut, and in fact, you can find some
really flexible mortgages to fit your
lifestyle if you need the help with paying it back. For example, you can create a
mortgage which ties in with your savings and current account for an
integrated system.
If you want to be able to miss a monthly payment due to a struggle with
money, traveling or education: you are able to take out mortgages which
will offer you a payment holiday. This will allow you to live your life the
way you want and fit your payments into this lifestyle in a good way.
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