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Is the Time Right for You to Re-mortgage?
by Rhiannon Williamson |
At certain times and in certain circumstances it actually makes more sense for someone to re-mortgage than to stay with their current lender and ride the waves of ever changing interest rates.
This article looks at five specific reasons .. |
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At certain times and in certain circumstances it actually makes more sense for someone to re-mortgage than to stay with their current lender and ride the waves of ever changing interest rates.
This article looks at five specific reasons to re-mortgage but first things first I must just point out that the information contained in this article does not constitute personal advice and because your circumstances and financial position are as unique as you are, you should seek professional, regulated and specific advice before re-mortgaging to ensure that this is the best decision for you right nowÂ…
1) If your mortgage introductory or fixed rate period is about to expire you can save substantial money over the period of your loan if you re-mortgage. You avoid having to start paying your mortgage lender’s variable rate of interest which is highly likely to begin at least one percentage point above that which you have already been paying and which could increase your monthly outgoings significantly. Over the lifetime of your loan just a one percent increase will result in you paying back thousands in extra interest payments – money you could save towards retirement, put in a fund for your kid’s college education or use to actually pay off your mortgage faster…which leads me neatly to my next point!
2) Many lenders are trying to attract your new business and will offer you attractive re-mortgage rates now which will reduce the amount youÂ’re already paying. If you can currently afford what youÂ’re paying why not forego the reduction and instead continue paying the same amount with the new lender and pay back your mortgage quicker. The years or even months you can shave off the term of your loan are years or months without interest payments which are years or months youÂ’ll be significantly wealthier.
3) If youÂ’re not wholly comfortable with your current monthly repayments then ignore point 2 and look at re-mortgaging to a cheaper lender and taking the discount.
4) Make life simpler by considering a fixed rate mortgage so you donÂ’t have to worry about interest rate fluctuations and can budget more effectively.
5) If you have accrued equity on your property you could consider re-mortgaging up to the new value of your property and using the additional funds to buy an investment property from which you could either draw down a regular income in the form of rent or which you could use for capital appreciation purposes.
With this extra money you could consider buying an overseas investment property in a country with an emerging property sector which will initially cost you less, let you and your family have a holiday home and remove expensive annual holiday costs, you could also rent it out when youÂ’re not using it to generate an income to afford to pay for the property and over the long term this propertyÂ’s value could rise significantly. Later in life you might choose to retire to this property or sell it for a nice lump sum that you can take into retirement.
Examine your options carefully and remember to look at the bigger picture! If you can profit from a re-mortgage then take the deal, but get expert advice and assistance before entering into any investment decision.
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