Why Should I Re-Mortgage

The main reason that you might want to re-mortgage is to save money. And this can be big money - as site user Adrian emailed:

Reasons Why You Might Want To Consider A Re-mortgage

The most commonly acceptable reasons to raise money are for home improvements and paying off other debts. Just be prepared for your lender to ask for evidence if you are borrowing a large amount, e.g. builder quotes, or proof that you have paid off the debts.

Why shouldn't I re-mortgage?

  • Your mortgage debt is really small.
    Once your loan falls below a certain amount – say around £50,000 – it may not be worth switching lender simply because you are less likely to make a saving if the fees are high. In fact, some lenders won’t even take on mortgages below £25,000.
    Do have a look but you’ll probably want to look at rates with a small fee, or no fee at all. The smaller your mortgage, the worse the effect of any fees you need to pay. Quite often, you’ll be better remaining on the higher interest rate.
  • Your early repayment charge is large.
    A large early repayment charge could mean that it’d be utter foolishness to move before the end of the incentive period. It would cost too much to free yourself from your current deal, then it’s all the more important that you do your homework and be ready to move as soon as you can.
  • Your circumstances have changed.
    It’s possible that your financial position has altered since you took out your current mortgage - for instance, one of you has stopped working or you have become self-employed.
    Stricter mortgage rules introduced in April 2014 mean lenders MUST now see evidence of your income. New lenders may not be prepared to offer you a loan because you no longer fit their criteria, meaning you may have to stay where you are.
  • Your home's value has dropped.
    You may have had a 10% deposit when you bought your home and got a decent mortgage, borrowing the remaining 90% of your home’s value. But now, your house price has dropped and the amount you owe is a bigger proportion. Unfortunately, you’re a victim of evaporating equity, even if you have been making repayments, and that can hurt you. In some cases, you may be in negative equity, where your debt is higher than the value of the property.
    The only thing you can do is sit tight, make overpayments whenever you can afford it as long as you won’t be charged fees as well, and wait for prices in your area to go up again.
  • You have very little equity.
    If you need to borrow more than 90% of the value of your property – then you’ll often find it difficult to find a better rate.
    Although at the time of writing, there are more mortgages at 95% than we have seen for a long time so it’s worth checking to see if it’s worth switching. Don’t forget to check if your current lender charges an early repayment charge to leave.
  • You've had credit problems since taking out your last mortgage.
    Since the credit crunch, lenders have become much pickier about who they lend to. The regulator, the Financial Conduct Authority, now also requires them to carefully check the mortgage is affordable, not just at current rates, but at a higher rate too, to ensure you could cope if interest rates were to rise.
    As a result, lenders will want a lot of detail about your outgoings and are looking for spotless repayment histories or at least a good, clean record of handling debts well.
  • You're already on a great rate
    You may be already on such a fantastic deal that you’d be mad to move. But don’t get too comfortable – chances are it won’t always be top of the tree so eventually you’ll need to consider hopping onboard the re-mortgaging merry-go-round.

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