Remortgaging: the pros and cons

With interest rates at an all time low and loan providers bending over backwards to win new business; there's never been a better time to consider remortgaging your property. In fact, once you've seen what you could save - you'll wonder why you've waited so long.

Many people have an antiquated view of what remortgaging a property involves and are put of by memories of the hassle involved in getting their first mortgage. However, the good news is that remortgaging a property is an entirely different financial ball game. The competitiveness of the market means that banks and building societies have to fight hard for business. As a result you'll get a good deal and they'll do most of the hard work for you.

As with any aspect of personal finance it's important that you do your homework first. Switching lenders is both easy and likely to save you money, but it can come at a price. Many mortgages have steep redemption penalties designed to tie the borrower to the loan. This doesn't mean that you can't change mortgage, just that you may have to pay an initial financial premium.

If you're currently tied to a mortgage you'll have to balance the cost of paying-off any redemption charges against the potential savings of changing to a lower interest rate. When doing your sums remember to think in the long term, as short term gain is unlikely

Having remortgaged your property once, you might find that you've developed a taste for it. If you've already been stung by hefty redemption charges, make sure that you don't make the same mistake again by shopping around. Don't forget that you'll also have to budget for additional solicitor's fees and administration costs. Some mortgage providers offer to cover the legal expenses in exchange for a slightly less favourable interest rate, and again it's a case of doing your homework. If you are in any doubt about which re-mortgage package is best for you; consult a mortgage broker or an independent financial advisor.

 

 

 

 

 

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