With interest rates at historic lows many homeowners are considering the benefits of remortgaging their property. Before you decide to remortgage your home it is important that you are aware of the benefits and costs of doing so. Below are some of the reasons that you may want to remortgage your property.
Lower Your Interest Rates
The most common reason that people choose to remortgage their home is to pay a lower interest rate on their mortgage. If interest rates have dropped since you took out your loan you may be able to remortgage at a lower rate and thus reduce your monthly payments. Alternatively if you remortgage at a lower rate and keep your monthly payments the same, you may be able to reduce the term of your mortgage.
When deciding whether to remortgage or not to take advantage of lower interest rates you need to measure the costs involved against any potential savings. And you can do that best by using a mortgage calculator like the one from Clydesdale Bank. The savings will be the difference in monthly payments over the term of the loan. The costs could involve any penalties for breaking the existing mortgages and the fees for setting up the new loan.
You Want To Unlock Capital
One of the reasons that people choose to remortgage their property is to unlock capital in their home. If the current valuation for your property is higher than the mortgage on it, then you may be able to remortgage for a higher amount and use the additional funds for other purposes. Typical reasons why people want to unlock value in their home including paying for renovations or large one off costs such as university fees. If you are unsure how this works, check out this guide.
Consolidate Your Debts
Because your mortgage is secured against your home, the interest rates you will pay are some of the lowest available. If you have other debt such as car loans or credit card debt, then it can make sense to remortgage your property so that you can pay these off. Consolidating your debt in this way will almost always lower the average rate of interest that you have to pay. Click this link to get some tips on proper debt management.
In general your decision to remortgage your property should be based on whether the benefits of doing so outweigh the costs involved. You should also consider whether the additional stress involved in re mortgaging your property justifies the financial advantages of doing so.
This guest post was contributed by CB Online.