We’re all looking at ways to cut back right now but there could be a very simple way to reduce your outgoings. That’s because you might be able to save money by remortgaging. But what is remortgaging and how much could you save?
What is remortgaging?
When you shop around to see if you can find a better deal on a mortgage than you’re currently on and switch to it, this is known as remortgaging. It’s a bit like when you’re looking for a new mobile phone and you’re comparing deals – you’ll want to make sure you’re on the right deal. And as your mortgage is likely to be your biggest monthly expense, if you can make savings on the amount that you pay each month it could have a big impact on your household finances.
How could remortgaging save me money?
So how could you save money by remortgaging? Well there are different ways including:
- Reducing your monthly repayments: If you remortgage onto a better rate than you’re currently on your monthly repayments will be lower. Depending on the rate you’re currently on and the new rate you can get this could be a big saving each month.
- You’ll avoid rolling onto the SVR: When you take out a mortgage, once your deal ends, you’ll be moved onto what’s known as your lender’s standard variable rate (SVR). This rate could be much higher than the rate you had been on. And if this happens your monthly repayments could rise sharply.
But you can avoid this happening by remortgaging onto another deal. However bear in mind it usually takes around 4-8 weeks to remortgage, but it can take longer. So it’s a good idea to start the remortgaging process several months before your current deal ends. This means it’s more likely you’ll move straight from your old deal to your new one and avoid the SVR completely.
- You can protect yourself against any interest rate rises: The Bank of England has increased the base rate of interest several times since December. And if you’re currently on a tracker mortgage and the base rate rises, you’ll pay more on your mortgage each month. And if you’re on your lender’s SVR your repayments may increase too (although this will be at your lender’s discretion). However if you remortgage onto a fixed deal the amount you’ll pay each month will stay the same for the duration of your deal.
How much does remortgaging cost?
But when you’re looking into how much you’ll save by remortgaging remember you’ll need to consider any fees you’ll need to pay. For example you may need to pay an arrangement fee for your new mortgage. And there may also be fees to leave your current mortgage such as an early repayment charge.
However don’t worry about doing all the calculations yourself. That’s because if you speak to an expert mortgage adviser not only will they be able to talk you through the remortgage deals available to you, they’ll explain any costs as well as any savings so that you’re fully informed.
How do I get started?
If you’re interested in finding out more about remortgage deals and if you can save money by taking one out? Then you’ve come to the right place. We have a team of expert mortgage advisers ready to help you. So get in touch today!
You may have to pay an early repayment charge to your existing lender if you remortgage.