Remortgaging is the new subscription service. Be head smart – save money and be mortgage-free quicker! Ask Paula Cook about remortgaging.

Over 30% of people aren’t sure what the term ‘remortgaging’ means but, it is a great way to save money on your monthly mortgage payments! If you are one of the many people in the dark about remortgaging, don’t worry, you’re not alone. As your local mortgage advisor, I am here to help. Here’s my complete guide to remortgaging.

Research shows that almost 20% of people think remortgaging is due to financial difficulty or involves taking on more debt, but neither is the case. Remortgaging could save you money and help you pay off your mortgage faster! To put it simply, ‘remortgaging’ means switching to a different mortgage to get a better rate than your bank currently offers and can be done after the initial mortgage term ends. Remortgaging can also allow you to fix the interest rate so you know exactly how much you will be paying for a set period or it can allow you to reduce the term of your mortgage if you want to pay more. It’s the perfect time to review your mortgage.

Still confused? Think of your mortgage like a subscription service, for example, Amazon Prime or HelloFresh. You’re tempted by an initial £5 a month for six months trial and then after that period is up, the deal ends and they increase the monthly bill to £20. At this point, most of us cancel the subscription and see if we can get that trial price again or move to another company offering something similar for less. That’s remortgaging. If it helps, think of it as a mortgage renewal.

When you take out a mortgage, you will have an initial term of usually 2, 3, 5 or 10 years, which is like the introductory trial period. During this time, you will often pay less interest.

Interest is the amount of money you have to pay the bank on top of repaying the loan itself. The lower the interest rate, the less money you have to pay back. However, after the initial term is over, you will move onto the bank’s Standard Variable Rate (also known as full price). When you move to the SVR your monthly payments increase considerably but you won’t be paying off your mortgage any faster because what you are actually paying off is the higher amount of interest. That is why remortgaging can save you money! It’s estimated that homeowners could save up to £4,080 a year by remortgaging away from the SVR to a lower interest rate. Unlike a subscription, you can’t just cancel your mortgage. However, there are ways to enjoy a cheaper option. You could switch to another mortgage with a lower interest rate offered by your current bank or move to a new bank. Both options can incur costs, such as exit fees.

Speak to Paula Cook Mortgage Broker to find the best option for you.  She can let you know the mortgage rates available and work out your cheapest option. Contact Paula Cook Mortgage Broker on 07950287868 or go to the Contact Page.