When is a Good Time to Remortgage Your Home?

In recent years we have seen a dramatic decrease in the base interest rate. This decrease has been primarily used in an attempt to stimulate the housing market. The thought process is that a lower interest rate will increase buying power and therefore more people will buy homes that could not or would not in the past. There are many other benefits to having a low base interest rate, however. There are lower interest rates on auto loans, student loans and all other types of loans, making life more affordable for the average person. One way in which many homeowners have been taking advantage of the low base rate is by finding remortgage deals.

What is a Remortgage?

A remortgage, also known as a mortgage refinance, is when a homeowner changes the terms on his mortgage. This does not mean that there is a second mortgage or a new property involved in the transaction, it is just changing the original mortgage. It can be done with a new lender or the original lender of the mortgage and usually involves using the funds from a new mortgage to pay off the old one.

Why Would I Do a Remortgage?

It is not for everybody, but there are a few great reasons why a homeowner would do a remortgage. First, you can drastically lower your interest rate. Lowering your interest can lower your housing payment by hundreds of dollars a month depending on the amount of your loan and the difference between the old and new rate. This can save some borrowers tens of thousands of dollars over the course of a thirty year mortgage, and the best remortgage rates are available now! Another reason some homeowners take advantage of a remortgage is to make their payments more affordable. They may lower their interest rate, but they may also change the term of their mortgage. By stretching their mortgage out over a longer period of time the monthly payments will decrease significantly, making their home more affordable.

Is a remortgage right for you?

It is important to run some financial numbers before going through with a remortgage. If you are trying to take advantage of a lower base rate you must compare how much you will save each month to how much you will pay in fees to initiate the new mortgage. For some homeowners, a lower rate will not save them money because they are paying high fees and may not plan on being in their home long enough to take advantage of the lower monthly payments.

Talk to a specialist today to find out if a remortgage is right for you. This is the time to lower your interest rate on your home and to free up some extra cash every month. Just remember that a remortgage is not for everybody, so be sure to do your due diligence before signing the dotted line!