Investment Advice – Why Should I Remortgage?
Remortgaging your home can be a great idea in the right circumstances. Not only does it give you more financial flexibility and help improve your long term financial prospects, it could also help you avoid risky financial practices. In this article, we’ll break down some of the more common reasons why people decide to remortgage their properties.
At Giliker Flynn, we don’t believe in telling clients what to do. What we do believe in is giving our clients the best possible financial and investment advice. We’re not beholden to anyone other than our regulatory bodies and our clients.
In this, the second of our articles on investment advice, we’ll go over the reasons why people remortgage. While remortgaging isn’t a good idea for every client, if any of the following reasons are applicable to you, contact us today and we can discuss your financial needs in a free consultation.
Do You Want To Borrow More Money?
The most common reason why people decide to remortgage their property is because they want to borrow more capital.
There are numerous reasons why you may want to borrow more against your house. For example, you may want to make some home improvements without having to make monthly payments on a loan. Or you may be involved in a divorce settlement and want to buy your partner’s share of your home.
Regardless of the reason why, remortgaging your home to raise more capital is a valid course of action. Depending on your mortgage provider, you may face more questions at the lending stage. Don’t be alarmed if this is the case. Your lender is just trying to work out if you still fulfill the assessment criteria in order to remortgage.
Do You Want to Be on a Better Rate?
Another common reason why people decide to remortgage their homes is because they want to save money and not accrue an interest rate. While there may be early repayment charges associated with this, as well as an exit fee, the savings could be absolutely huge.
Because of those savings, it’s not a bad idea to consider remortgaging if you’re looking for a lower mortgage rate. It’s important to make sure to monitor both the base rate and the average interest rate for your preferred lender’s mortgages, however. This is because you may accidently wind up with a higher interest rate than your initial one if you are not careful.
Is Your Current Fixed Rate Deal is Up For Renewal?
Related to the above, you may be in a situation where your fixed rate deal is up for renewal and you want a better rate on your mortgage payments. This will allow you to catch another low rate and avoid the bog standard one, helping you to save money in the long run.
As such, remortgaging could be a great idea, depending on whether or not you can get a comparable deal to your existing one.
Do You Want to Change From an Interest Only to Repayment Mortgage?
You might have found yourself agreeing to an interest only mortgage only to find yourself regretting the decision later on. Or maybe your interest only loan period has come to the end. Either way, it’s time to start addressing that loan principal.
According to Jim Lilane of Stearns Lending, the Interest Only Mortgage is actually unsuitable for most lenders. In his words, it’s mostly a ‘cash management tool’ designed primarily for wealthier borrowers. As such, Interest Only Mortgages may in fact have been mis-sold to most borrowers.
Because awareness of this issue has grown considerably since the last housing crash, these mortgages have become rare. The United States’ Federal National Mortgage Association stopped purchasing them completely in 2015, and now lenders have to either hold them on their own books or sell them to their competitors — a bad sign for any financial product.
As such, our investment advice is that you should consider a repayment mortgage if you can.
Do You Want to Make Overpayments?
Making overpayments is when you pay more as part of your annuity one or more times, ultimately allowing you to pay off your mortgage sooner. Normally, borrowers choose to make overpayments because they have access to more capital and wish to end their mortgage early.
On paper this is a good idea as it allows you to pay off your mortgage and have more financial flexibility. However, many lenders frown on overpayments as they can lessen the amount of interest they can charge. When you’re stuck with a lender who doesn’t allow you to make overpayments, the only thing you can do is to remortgage. Depending on your relationship with your lender, this may mean moving to a different rate, or it could mean engaging the services of another lender entirely.
Contact Us Today To Learn More About Your Financial Security
Ultimately, remortgaging isn’t something you should consider lightly. To help you make that decision, you need sound financial advice from a company with your best interests in mind. Giliker Flynn is that company.
Based in Stoke-On-Trent, Giliker Flynn offers sound financial and investment advice to our clients. We help our clients in a variety of ways, including offering financial and investment advice, help with retirement planning, and with maximising their pension. We are authorised and regulated by the Financial Conduct Authority, as well as a number of other regulatory bodies.
For more information about remortgaging your property or anything else related to your financial security, get in touch with us today.