Remortgaging isn’t always the best option. Here are five reasons why you may want to reconsider.
1. Your outstanding loan is small (e.g. £50,000 or below).
The switching fees are likely to wipe out any potential savings.
2. You can borrow money more cheaply elsewhere.
Although it’s possible to borrow money against your property, it’s rarely the best solution. Consider: if you add £5,000 to a 25-year mortgage at 3 per cent, you’d pay as much in extra interest as if you’d borrowed that £5,000 over 5 years at a whopping 15 per cent. You can definitely find a better finance deal than that.
3. Your current mortgage has a large early repayment fee.
If you didn’t plan ahead and are saddled with a big redemption charge, then it may cost you more to move. However, your current lender may let to change to another of its own deals at a reduced charge. Check to see if they offer anything better and see if it’s worth moving.
4. You have a high loan-to-value ratio.
If your equity is low (say, if you’re on a 90 per cent mortgage) then you’ll struggle to get a better deal elsewhere.
5. Your circumstances have deteriorated.
Were you offered your current mortgage based on you and your partner having two steadier, higher paid jobs than you have now? If so, then consider sticking with what you’ve got – you probably won’t be offered a deal this good in your current situation.