When To Avoid Remortgaging
Even though there are a lot of potential savings to be made from it, a lot of people shouldn't remortgage. It's all a case of your time, money and what your personal situation is. Basically you'll need to think about if the savings at the time you switch will outweigh the overall cost, and you'll fit into one of the following categories...
If You Have A Bad Credit History.
If you have a bad credit history, for whatever reason, it's very unlikely you'll be approved for remortgage. Since the credit crunch lenders have become a lot more selective about who they approve.
If Your Circumstances Have Changed
It could be that your situation has changed since you first got your mortgage such as changing jobs or becoming unemployed and you could no longer meet the required criteria for a mortgage- in these cases it's best to stay where you are.
If You Are A Victim Of Bad Timing
Mortgage rates are constantly changing because of the bank of England base rate and the international situation. The figures might not add up right for you when you first consider remortgaging, so in these cases it's best to hang fire and wait a few months.
If You Own Less Than 25%
If you own less than a quarter of your property outright then it's very hard to find a new mortgage deal. It's still worth looking around and checking, but deals for those who have little equity in their property are very rare. Some do exist, but watch out for the high interest rates that are attached to them. However, with dipping house prices it can often mean that the deposit you paid years ago doesn't cover it any more.
If You Have A Very Small Mortgage
Once your loan falls below a certain amount, say £50,000 it might not be worth switching mortgages purely because you won't make a saving if the fees are high. The smaller your mortgage the more fees it will cost you to move and often it's better staying with the higher interest rates just to avoid the fees.
The Fortunate Ones
You might be on a really good deal already and it would be foolish to move, but don't get too complacent. There's a strong chance your deal won't always be top and eventually you'll need to consider getting back into the mortgage market so it's worth doing checks to make sure you get one as good as the last.
The Unfortunate Ones
On the other hand, you might be on such a bad deal that you desperately need to move before the end of the term. If you're on such a rubbish deal the key aim is to move as quickly as possible so make sure you do your research and be ready to move. Don't worry about how much money you're wasting in the mean time because it's possible that your lender might allow to you switch to another deal by paying an early repayment charge. Even though you might not get onto one of their best deals, anything might still be better than what you're currently on.