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BELFAST, CITY CENTRE: 028 9013 7392
BELFAST, EAST OFFICE: 028 9560 9410
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DROMORE: 028 9210 6060
LISBURN: 028 9279 4300
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Should You Remortgage? Top Reasons to Consider

by | Jul 11, 2024 | Uncategorized | 0 comments

Imagine saving thousands of pounds without changing your daily routine, sounds appealing, right? That is the ability that remortgaging your home has to provide. While many seek a better mortgage deal for a lower interest rate, there are several compelling reasons why you might consider this financial strategy. Perhaps you want to fix your interest rate for greater stability or explore the benefits of offsetting your savings against your mortgage.

Gone are the days when homeowners took out a 25-year mortgage and stuck with the same lender until the end. Today, savvy individuals are leveraging the competitive mortgage market, switching lenders to secure better terms and significant savings. Keeping an eye on market trends is essential, ensuring you’re not overpaying on your mortgage, potentially saving you thousands in interest over the loan’s lifespan.

If you have substantial equity in your home; meaning your mortgage is relatively small compared to the property’s value, you might even consider increasing your remortgage loan to access some of that equity. This could fund home improvements or pay off high-interest debts, providing financial flexibility.

For those based in Belfast, navigating the remortgaging process can be smoother with the guidance of a professional in this field. Therefore we would encourage you to Consult with a mortgage advisor in Belfast city from The Mortgage clinic as they can help you understand your options and find the best deals tailored to your needs. 

Let’s have a look into the reasons for remortgaging, helping you determine if now is the right time for you to switch lenders and potentially enhance your financial situation.

Your Current Deal is About to End

When your existing mortgage deal comes to an end, you’re usually transferred to your lender’s Standard Variable Rate (SVR). This transition often leads to higher monthly payments, as the SVR tends to be higher than the initial fixed or discounted rate you were paying. To avoid these increased costs, many homeowners look to remortgage with a new lender who can offer a more competitive rate.

This proactive approach can save you significant amounts over the life of your mortgage. By switching lenders, you not only secure a lower interest rate but also potentially benefit from better terms that suit your current financial situation. Consulting with a mortgage advisor in Belfast city can help you navigate these options effectively, ensuring you make the most informed decision.

The Value of Your Home Has Increased

If the value of your home has risen since you first took out your mortgage, you might be in a strong position to secure a better deal. The loan-to-value ratio (LTV) is a key factor here, this ratio represents the size of your mortgage relative to the value of your property, expressed as a percentage. For example, if you initially had a 90% LTV with a 10% deposit, but you’ve since paid off more of your mortgage, and your property value has increased, your LTV will have decreased.

A lower LTV often qualifies you for more favourable mortgage rates. For instance, if your LTV has dropped to 70%, you’ll likely find that better mortgage deals are now available to you. However, it’s important to consider any Early Repayment Charges (ERCs) that might apply if you switch deals before your current term ends. Consulting a mortgage broker in Belfast city can provide you with tailored advice on managing these costs effectively.

Seeking More Flexibility for Overpayments

Making overpayments on your mortgage can be a smart financial move, especially if your current interest rate is low and you expect rates to rise in the future. Overpaying allows you to reduce the principal balance faster, potentially saving you thousands in interest and shortening the term of your mortgage. However, not all lenders offer the flexibility you might need to make these additional payments without penalties.

If your current lender restricts overpayments or charges fees for making them, it might be time to consider remortgaging to a more accommodating deal. Look for mortgage products that allow unrestricted overpayments or have higher annual overpayment limits. This flexibility can be particularly advantageous if you anticipate having extra funds in the future that you’d like to use to pay down your mortgage more quickly.

You Want to Borrow More

Thinking of knocking down that wall for an open-plan kitchen or renovating your outdated bathroom? Remortgaging can provide the funds needed for significant home improvements, which can add value to your property. By increasing your mortgage, you can release equity to cover the costs of these enhancements.

For major projects like loft conversions or adding a conservatory, which can cost thousands of pounds, remortgaging might be a cost-effective borrowing option. The interest rates on mortgages are typically lower than those on personal loans, and you can spread the repayment over a longer period.

However, if you’re only looking to borrow a small amount, an unsecured personal loan might be more suitable. While the interest rates and monthly repayments might be higher, you’ll pay off the debt faster and pay less interest overall.

Financing the Purchase of Another Home

Remortgaging one property to finance the purchase of another can be a viable strategy if you have enough equity in your current home. This approach is similar to buying a buy-to-let property, but instead, you’re acquiring another home for personal use. By freeing up equity, you can put down a larger deposit on your new property, potentially securing better mortgage terms.

As with buy-to-let properties, you’ll need to demonstrate to lenders that you can manage the higher repayments. Unlike buy-to-let, however, you won’t have rental income to offset these costs, so you must prove you can cover both mortgages with your income alone. 

Using Remortgaging to Pay Off Debts

If you’re struggling with debts, remortgaging your home can be a strategic way to consolidate and manage your financial obligations. Using the equity in your property to pay off high-interest debts, such as credit cards or personal loans, can reduce your overall interest payments. Mortgages typically offer lower interest rates and longer repayment terms compared to unsecured loans.

However, it’s important to carefully consider this option. By converting unsecured debts into secured debt against your home, you increase the risk of losing your property if you’re unable to keep up with mortgage payments. While this method can provide immediate financial relief and lower monthly payments, it may result in paying more interest over the long term due to the extended repayment period.

Before proceeding, consult with a mortgage advisor in Belfast city to explore your options and ensure this is the right move for your financial situation.

Visit Our Belfast City Center Office for Expert Remortgaging Advice

Deciding to remortgage can be a significant financial decision with the potential to save you money, provide financial flexibility, and help you achieve your financial goals. Whether you’re nearing the end of your current deal, looking to leverage your home’s increased value, or seeking more favourable terms, remortgaging could be the right move for you.

At the Mortgage Clinic in Belfast, our experienced mortgage advisors are here to guide you through every step of the remortgaging process. We understand that every client’s situation is unique, and we are committed to providing personalised advice tailored to your specific needs and circumstances. Our Belfast city center office is conveniently located, making it easy for you to drop in and discuss your remortgaging options with a professional. Our team will help you navigate the complexities of the mortgage market, ensuring you secure the best possible deal.

Helmut Elstner

Managing Director – Independent Mortgage Broker and Insurance Advisor

Helmut started working in financial services in early 2012 and founded The Mortgage Clinic in Belfast in early 2015. He specialises in all types of mortgages from First Time Buyer, Co-ownership, Self Build, Home Movers, Remortgages, Debt consolidation, to Buy to Let.

Three Best Rated Winner 2021
Winner Mortgage Broker of the year 2020
Top Rated Advisor 2021 on Vouchedfor