33% of Those Looking for a Mortgage Are Remortgaging Are You?
3 minute read
New research from Connells Survey & Valuation, a leading surveying and valuation company, found that one-third of property valuations are for remortgages. To protect ourselves from a possible Brexit downturn, many Britons are remortgaging to lock in low rates and lower monthly payments. Before you join the remortgage rush, it is important to consider whether a remortgage is really the best option for your needs. Here are a few points to consider.
Could a Remortgage Help You?
When life-changing events happen – like a pay cut or a new baby – families might need to miss a mortgage payment because money is tight. Lesley, a Money Saving Expert advisor, suggests that switching to a flexible mortgage could be the answer. Choosing the mortgage payment holidays offered by more flexible remortgages could reduce financial hardship when the unexpected happens.
Families are not the only beneficiaries of lower remortgage rates. In April 2017, buy-to-let tax relief for landlords was cut. Numerous tenants were given notice and landlords had to sell their properties to prevent financial losses. Could a remortgage have helped? Lower interest rates might have increased profit margins so landlords could afford to stay in the rental business.
Or Could a Remortgage Hurt You?
Changes to the banking industry mean it could be a bad time to remortgage. The Bank of England insisted that lenders be stricter when vetting borrowers, and with good reason. Joanna Elson OBE, chief executive of the Money Advice Trust, says although most households can repay lower rates, “many risk finding themselves exposed to financial difficulty should their circumstances change”.  This suggests that remortgaging might not protect households against future money problems if the worst happens.
Another potential downside of remortgaging is an early repayment charge – typically 3-5% of your loan balance. This Is Money, voted financial website of the year, says a £150,000 mortgage could demand up to £7,500 in fees if a borrower wanted to leave early. With so much uncertainty after Brexit, households might find paying thousands of pounds too risky right now…
Should You Remortgage Your Property?
It very much depends on your personal circumstances. Is the remortgage for a family home or rental property? Does a lower mortgage rate justify a potential early repayment charge? Have you consulted with highly experienced mortgage experts like us? Whatever you decide, do not get swept up in the remortgage rush and make a rash decision – you could lose not only thousands of pounds but also your home.