5 Questions To Ask Before You Remortgage
There are many types of remortgage products available today, and finding the right one for your financial situation is important to the success of the process. Before you can select a mortgage product, you must identify what your specific needs might be. We have five questions that will help you determine the type of mortgage product that will be the best fit for you.
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Get a Quote »- How much is my home worth? The current value of your home will make a big difference in the type of deal you might expect from remortgaging. You can get a rough estimate of the value of your home through online calculators that are available. You can also compare your home with others in the neighbourhood that have sold recently to determine a ballpark figure on home value.
- How much do I owe? Before you apply for a new mortgage, it is a good idea to get a redemption quote from your lender. When you compare your loan balance with your home value, you get an idea of how much equity you currently own in your home. If the amount is 25% or less, a remortgage is probably not worth the time and effort. Most mortgage lenders want at least a 75% LTV (loan to value ratio) to issue new mortgage loans. Keep in mind that the more value you have, the better your remortgage deal will probably be.
- What does my credit look like? There are plenty of sources for free credit reports, and it is worthwhile to check yours before applying for a remortgage. Lending has tightened considerably in the midst of the current economic slowdown, and applicants with less than stellar credit may be hard-pressed to land a decent mortgage deal. If you do have credit issues, it might be worth waiting on the remortgage process to get your credit back in good standing once again.
- How much will a remortgage save? This can be a tricky formula, since you have to take a number of factors into consideration. First, determine what type of interest rate you can expect from a remortgage, according to the current market trends. You will also want to weigh whether you will be taking additional equity from your home to give you cash for debt consolidation or another purpose. Finally, take a close look at the fees involved with remortgaging to see if you really will come out ahead at the end of the process.
- How long will I stay in my home? Homeowners that are saving for a bigger property may be better off making the move rather than going through the remortgage process. Because of the fees involved with remortgaging, it takes a significant amount of time before you begin to cash in on the financial benefits of your move. If you will be moving too soon, it may end up costing you more than it saves.