How Much Could I Save By Remortgaging?
You may have heard of remortgaging if you own a home. Changing your current mortgage to a new lender or negotiating a new deal with your current lender is what this process entails. Saving money on your monthly mortgage payments is one of the main reasons to refinance, but how much could you save? Let’s look more closely.
What is remortgaging?
Remortgaging entails getting a new mortgage on your house to replace the old one. This could be with a different deal and a new or existing lender. There are a number of causes you might think about remortgaging:
Remortgaging may enable you to secure a lower rate and lower monthly payments if you are currently paying a high-interest rate on your mortgage.
To remove equity: You might be able to do so by remortgaging if the value of your home has increased since you first obtained your mortgage.
A remortgage may be able to help you if you want to shorten the term of your mortgage or lengthen it in order to lower your monthly payments.
Change from a variable-rate mortgage to a fixed-rate mortgage: If you currently have a variable-rate mortgage but would prefer the stability of fixed monthly payments, remortgage may be able to help.
How much could you save by remortgaging?
Remortgaging could save you money depending on a number of variables, such as:
- How much your mortgage is?
- You’re currently paying a certain interest rate.
- The potential interest rate for a new mortgage
- the duration of your mortgage
- Any remortgaging-related costs, such as early repayment penalties or arrangement fees
To help you visualize the potential savings, let’s use an example that is purely hypothetical. Let’s say you have a 20-year mortgage with a balance of £200,000 on a property worth £250,000. A fixed rate of 2.5% for the following five years has been offered to you in place of your current variable rate of 3.5%.
Your monthly payments would drop from £1,138 to £1,042 if you switched to the new arrangement, saving you £96 a month. This would amount to a total savings of £5,760 over the course of the five-year fixed term.
The amount you could save will, of course, vary depending on your specific situation; this is just one example. Before remortgaging, it is crucial to discuss the potential savings and associated costs with a mortgage advisor.
Conclusion
Your monthly mortgage payments may be reduced significantly by remortgage. However, it is crucial to balance any fees or costs related to switching with the potential savings. Speak with a mortgage advisor if you’re thinking about refinancing to learn more about your options and the savings you might be able to achieve.
