loan search for homeowners

A remortgage can be a solution for homeowners who want to pay less for their mortgage, or wish to free up some of their equity in their property as well as pay a lower rate of interest on it too.   

Remortgages become very popular when interest rates are at the low end of the mortgage rate cycle.  Borrowers that are currently in variable rate mortgage products may look to switch mortgage providers, as variable products generally fluctuate with the market.    

Fixed rate mortgages, too, who bought their loans at higher rates in order to get the security of a fixed monthly mortgage repayment and who have come to the end of their fixed rate term may look to remortgaging. In many cases – and if a homeowner chooses wisely – by remortgaging they can reduce the monthly interest payable significantly, even with a small percentage reduction in annual percentage rate.  

Another purpose for remortgaging is to take equity out of the home.  Home equity is the difference between the home’s current market value and the remainder of the debt obligation.  People who want cheap financing to use for home improvements, business expansion or start-ups, and more, may opt for a mortgage refinance if rates are favourable.  This only makes sense when better rates are obtained as well.  Otherwise, second charges may be a better alternative.  The best remortgages for this purpose pay off the original loan, have reasonable loan costs, and better interest rates.  

It should be noted that the best remortgages for one customer are not always the best for others.  This is true of the best times to remortgage.  Borrowers need to consider their housing situation before a remortgage to see if it is a viable option.  Remortgages have similar loan costs to first mortgages.  Borrowers need to compare the up-front costs with the proposed monthly savings to determine the time to break even.  This is similar to a business plan break-even analysis.    

Timeframes to recoup up-front costs of a new mortgage vary.  The gap between the old interest rate and new rate is important.  The greater the decrease in the rate the borrower pays, the more monthly savings the customer experiences.  Generally, customers can expect to repay the costs of remortgaging in the first few years of their new remortgage (these costs may include set up and admin fees, valuations and legal fees etc).  People expecting to move before the time point of break-even may not find it worth their while remortgaging.  

Finding the best remortgages is much easier in the internet business environment of today.  Consumers can easily explore their loan options online and get access to useful information and resources.  Borrowers can work with specialists to learn about all the product options available as well as what current rates could be obtained.  The more knowledgeable the borrower is before investing in a remortgage, the better position he is to get the full benefits of the loan.  Wise loan purchases, as with wise investments, require solid research and time consulting with experts.   

This remortgages article has been written by Robert Beaumont.

This article does not represent ‘financial advice’ as each individual's personal requirements will be unique to their own specific needs. If there is something in this article that you wish to rely on then please check those details with the person with whom you arrange a financial product or service.

The views in this article represent those of the author and not those of Netbasic Limited.