The Pros and Cons Of Remortgaging
While a remortgage might be a good financial move for many homeowners, it isn't right for everyone. People who are already in a stellar mortgage deal or who own less than 25% of their home probably won't find a deal in the remortgage market. Borrowers with bad credit or very small mortgages may also find the process of applying and paying for a remortgage is not worth the effort or the money.
Even if you do not fall into one of these categories, it is important to carefully weigh the pros and cons before moving forward with the remortgage process.
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Some of the pros of remortgaging include:
- The ability to borrow at a lower interest rate
- The option of utilizing your home's equity for additional cash
- The opportunity to switch to a product more suitable to your financial situation
- The flexibility to consolidate your debts into a single, affordable monthly payment
There are some drawbacks to a remortgage as well, which include:
- Stretching your debts to a longer time frame increases the overall cost
- When your home is used as collateral, it can be repossessed if you cannot keep up with the payments
- There are fees attached to remortgages, which may counter any of the benefits you might receive from negotiating a lower rate on your loan
- The remortgage process can take a number of weeks to complete, so you will need to be committed to the process to see it through to the end
Before you delve into a remortgage application, consider whether this step will be really beneficial to your current financial situation. If not, maybe this is not the right time to switch your mortgage product. If the benefits outweigh the drawbacks, read on for more information about how to find the best remortgage product for your needs.