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If the introductory period of your existing mortgage is coming to
an end, or if you are already paying the standard variable rate
(SVR) of the lender, then remortgaging could well save you a surprising
amount of money.
Presumably the idea of saving money, as much as hundreds of pounds
per month, appeals to you, but there are many people who feel
the hassle involved in remortgaging outweighs the savings that
they will make. The good news is that remortgaging is far simpler
than many think, and can be done in as little as a couple of hours.
Given that you are here reading this, you are probably aware
of the potential savings that can be made through remortgaging,
and are interested in benefiting from these. So, what steps do
you need to take in order to make the most of switching mortgages,
and what do you need to look out for? Well, below are some of
the main points surrounding remortgaging that should help you.
One of the first things you need to do is find out if there are
any penalties associated with early repayment of your current
mortgage, as this could effect whether you will see any savings
by remortgaging. Lenders will often try to ‘tie in’
customers to their mortgage by having financial penalties that
apply if the borrower wishes to pay off the mortgage early, as
this is what is done when remortgaging. The penalties, if any,
vary from lender to lender, but can be as much as three percent
of the outstanding mortgage, and can easily wipe out any potential
savings of switching.
Checking with your current lender if they could offer you a better
deal is also a good idea, especially if you do have early repayment
penalties as they will generally waive these when moving you to
a mortgage deal that is one of their own.
Moving to another mortgage will obviously require you finding
one to switch to, and its important that you do your homework
and find one that offers you what you are looking for, and that
doesn’t tie you in so be sure that there are no early repayment
charges, or at least that they are reasonable. The lower the interest
rate you can find the more you will save, how much lower the rate
will need to be in order for you to see a saving will depend on
if you have any fees to pay, how much your mortgage is for an
how long the repayment period is.
Now comes the important part, you need to do your sums to see
if remortgaging will actually save you money. Be sure to take
into account any of the costs and fees that you will have to pay,
and offset this against the savings you will make from a lower
APR to determine if it is worth you making the switch –
in most cases the answer is a resounding yes.
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