Remortgaging

Mortgage Lending Dropped

Secured lending on homes in July was below the average of the past six months.

It is now considered that the housing market has reached a turning point. Mortgage approvals are down as are remortgages and other secured loans.

The recent interest rate increases have now changed the mortgage and housing markets.

Remortgaging can help you…

save money each month. Saving money is the most common reason for remortgaging. It can also be the easiest to achieve. Here is how it works. If you have been with the same lender for more than a few years then you are likely to be paying its standard variable mortgage rate – that’s the rate paid by around half of all borrowers in Britain. Unfortunately standard variable rates tend to be expensive and they vary widely between different banks and building societies.

If you have a typical £125,000 mortgage with an expensive bank then you may be paying a standard variable rate of, say, 5.8 per cent – meaning you pay £608 each month in interest alone. A better value lender may have a standard variable rate of just 4.7 per cent, however, so if you remortgaged on to this deal your monthly payments would fall by £115 to just £493. That’s an immediate saving of more than £1,350 a year. But even this big saving can easily be beaten.

Most lenders offer a wide range of ‘special offer’ deals as well as their standard variable rate loans. And while they like to give the impression that they are only available to new homebuyers the reality is that most are available to remortgage customers as well. Remortgaging from an expensive standard variable rate on to a bargain basement discount deal can have a dramatic effect on your finances.

Remortgage the same £125,000 loan from 5.8 per cent, on to a discount deal charging, say, 3.75 per cent, and you will be saving £218 a month or £2,616 a year in interest. And the process should be simple to achieve. The second section of this guide explains how easy it can be to switch from a high to a low cost mortgage in this way – and what the costs of the change could be. But keep reading to see if a remortgage could bring you other key benefits as well.