Is it Necessary to Switch For Remortgage?

By Tom Darwin

People generally go for remortgage because they have to. They may be required to free up some equity in the property or they could have reached the end of their mortgage deal. On the other hand, some people remortgage because they have found a deal that is better than then one they have right now and its decided by them that by moving to it they want to cut their monthly payments.

The amount of interest on mortgage could vary from the amount that you generally think. This depends on the changes in the base rate set by the banks of the country as well as confidence level within the banking system and the existing economic conditions prevailing. Someone who is paying 7 percent mortgage has the option to switch towards a lesser rate of 6 percent or less.

Do you think its actually worth it? The answer could not be that straight as you may think. There are many mortgages options that have an ‘early redemption charge’- this is the fee that lender charges from borrower if they leave the option of mortgage earlier than the agreed time period. According to some people this could be unfair but the reason for this is that if they go for the option of leaving mortgage early, they would not be paying through the monthly installments according to the expectation of the mortgage lender.

The charge of early repayment may be the significant amount that could be in thousands of pounds. Its not the only expense involved in the process of re mortgaging, the new mortgage also includes up-front fees.

In case make the decision to switch to a new mortgage, you need to do the calculations very carefully and ensure that costs do not add too much. Its quite important to understand if the new mortgage deal will prove to be cheaper for you. It is good to take the consultation of mortgage advisors while switching to a new mortgage or pursuing for cheaper options.

Tom Darwin is an author and holds a mater degree in Business Administration. He is currently assisting First Choice Loan as a finance specialist. For more information related to remortgage, remortgage deals & rate, remortgage comparison and debt advice & solutions please visit http://www.firstchoiceloan.co.uk/

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