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If you're thinking about getting a new mortgage for your home because its value has increased, that's a clever idea. 

It could help you save money or open up new possibilities for you. 

In this blog, we'll explain the best remortgaging options for homes with increased value. 

We'll break down how it works and give you clear explanations below.

What is Remortgaging?

Remortgaging is essentially when you switch your current mortgage deal to a new one, either with your existing lender or a different one. 

People usually do this to take advantage of better interest rates, change the terms of their mortgage, or release equity from their home.

Why Remortgage When Your House Value Increases?

Remortgaging your home when its value increases can offer several benefits. 

Let's explore why it might be a smart move for you.

Lower Interest Rates

If your home's value has gone up significantly since you got your first mortgage, you might qualify for lower interest rates.

This means you could end up paying less money in interest over time, saving you a substantial amount.

Releasing Equity

When your home's value increases, you build up equity, which is like the ownership stake you have in your home.

Remortgaging allows you to access this equity, giving you cash that you can use for various purposes.

You could use this money for home improvements, to pay off debts, or to fund a big purchase like a car or education.

Changing Terms

Your financial situation might change over time, and the terms of your original mortgage may no longer be the best fit.

Remortgaging gives you the chance to renegotiate the terms of your loan.

You can adjust things like the length of the loan, the type of interest rate, or even switch from a fixed-rate to a variable-rate mortgage.

Remortgaging your home when its value increases can offer you lower interest rates, access to equity, and the opportunity to adjust your loan terms to better suit your current financial situation. 

It's a smart move that could save you money and open up new financial opportunities.

Options for Remortgaging

Remortgaging your home after its value has increased can be a smart move, potentially saving you money or opening up new opportunities. 

Here are some options to consider:

Staying with Your Current Lender

   Easiest option since your current lender has your information.

   They may offer a new deal based on increased property value.

   Still, compare rates with other lenders to ensure the best deal.

Switching to a New Lender

   Don't hesitate to explore options beyond your current lender.

   Other lenders may offer better deals, especially with significant value increases.

   Consider any fees associated with changing lenders.

Changing the Terms of Your Mortgage

   If your financial situation has changed, consider altering mortgage terms.

   Extend the term to reduce monthly payments or switch between variable and fixed rates.

   Adapt terms to better suit your current needs.

Releasing Equity

   Remortgage for a higher amount than your current balance to release equity.

   Be aware that this increases monthly payments.

   Ensure affordability before proceeding with equity release.

Remortgaging your home after its value has gone up offers several options to consider. 

Whether you stick with your current lender, switch to a new one, adjust mortgage terms, or release equity, be sure to weigh the pros and cons carefully to make the best decision for your financial situation.

Things to Consider

Before you jump into remortgaging your home, it's essential to consider a few key factors. 

Here are some important things to keep in mind:

Fees

When you remortgage, there are often various fees involved, such as arrangement fees, valuation fees, and legal fees.

It's crucial to factor these fees into your calculations to ensure that remortgaging is financially beneficial for you.

Credit Score

Your credit score is significant in determining if you qualify for a new mortgage deal and what interest rate you'll get.

Make sure your credit score is in good shape before applying for a remortgage.

Affordability

Just because you can get a larger mortgage doesn't mean it's wise to take it.

Ensure you can afford the increased monthly payments, considering changes in interest rates or mortgage terms.

Future Plans

Consider your long-term plans before remortgaging.

Are you planning to stay in your current home for a while, or do you intend to move in the near future?

Make sure your mortgage aligns with your future goals.

Before deciding to remortgage your home, it's crucial to carefully consider these factors. 

You can ensure that remortgaging is the right financial decision for your current situation and future plans.

Does your mortgage go up when you remortgage?

When you think about remortgaging, you might wonder if your mortgage will go up. 

Let's explore this question in detail to understand how remortgaging works and whether it always leads to higher mortgage payments.

Not Always Increase

When you remortgage, your mortgage amount doesn't always go up.

It can stay the same or even decrease.

Depends on Factors

Whether your mortgage increases depends on different things.

Factors include your home's value and the new terms you pick.

Paid-off Loan Parts

If you've paid off some of your loans, your mortgage might go down.

This means you owe less money on your home.

Home's Value

If your home's value has increased, you might not need to borrow as much.

So, your mortgage amount could stay the same or decrease.

New Terms

The terms you choose for your new mortgage also matter.

You could pick terms that keep your mortgage amount the same or even lower it.

Various factors, such as your home's value, the terms you choose, and any parts of your loan you've paid off, can influence whether your mortgage stays the same or decreases. 

It's essential to consider these factors carefully before deciding to remortgage your home.

How much equity do you need to remortgage?

Before you decide to remortgage your home, it's essential to understand how much equity you need. 

Equity plays a crucial role in determining your eligibility for a remortgage and the type of deals you can access. 

Let's explore the factors that influence the equity requirement for remortgaging.

Lender's Requirements

Different lenders may have different rules about how much equity you need to remortgage. 

Some may require a specific percentage of equity in your home.

Type of Deal

The equity requirement can vary depending on the type of remortgage deal you're interested in. 

Better deals may require higher equity.

General Guideline

Having at least 20% equity in your home is often considered a good starting point. 

More equity can lead to better deals and lower interest rates.

Variability

Equity requirements can vary based on your circumstances and the lender's policies. 

Factors like credit score and income also influence the equity needed.

Consideration

Before applying for a remortgage, consider your current equity and whether it meets the lender's requirements. 

You may need to build more equity through mortgage payments or home value appreciation.

Understanding how much equity you need is essential for a successful remortgage process. 

Considering factors like lender requirements, deal types, and your financial situation, you can determine the right amount of equity and make informed decisions about your remortgage.

Does remortgaging increase the term?

Remortgaging can sometimes lead to changes in the length of your mortgage term. 

Here's how it works:

Option to Extend Term

When you remortgage, you might decide to extend the term of your mortgage. 

This means spreading your repayments over a longer period, which can result in lower monthly payments.

Extending the term could be helpful if you're looking to reduce your monthly financial burden.

Option for a Shorter Term

Conversely, you also have the option to choose a shorter mortgage term when you remortgage. 

This means paying off your mortgage in a shorter period, which might lead to higher monthly payments but lower overall interest costs.

Opting for a shorter term could be beneficial if you want to become mortgage-free sooner and save on interest payments.

Personal Financial Goals

Ultimately, the decision to increase or decrease the term of your mortgage when remortgaging depends on your financial goals.

Consider factors such as your current financial situation, future plans, and how comfortable you are with your monthly payments.

Remortgaging gives you the flexibility to adjust the term of your mortgage according to your needs and goals. 

Whether you choose to extend or shorten the term depends on what works best for your financial situation and objectives.

Making the Most of Your Home's Value

RM Financial Consultants Ltd offers a unique and personalised approach to remortgaging that fits your needs and busy schedule, we're here to accommodate you. 

Remortgaging your home after its value has increased can indeed be a savvy financial move, but it's crucial to weigh your options carefully. 

Whether you aim to lower interest rates, release equity, or adjust mortgage terms, there are numerous possibilities to explore. 

To conduct thorough research and seek advice from a financial advisor if needed. 

With the right approach, remortgaging could be the key to maximising the benefits of your home's increased value.
Contact RM Financial Consultants Ltd today to explore our remortgaging options.

Information was accurate at time of publication.
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