Refinance mortgage

There may be many different reasons for you wanting to refinance your mortgage and whether you choose to or not there are advantages and disadvantages to this. The main attraction to refinancing is having a smaller payment every month, which is why most people ask this question.

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What is refinancing your Mortgage? Well to put it simply, refinancing your Mortgage means taking out another Mortgage in order to pay off your existing one. For example, if you take a Mortgage over 30 years for £500 000, and after a few years of paying you are left with an outstanding balance of £200 000 with just 15 years left to pay, you can refinance to pay that £200 000 off over another 30 year period, thus decreasing your monthly payments.

The lower monthly payments are a huge advantage, making more funds available for you every month to do with as you please. You could also end up paying less for your home than you initially would if you continued with your previous Mortgage. The reason for this is that when you refinance your interest rate will drop down to the initial lower than normal rate and rise as the time goes by. This is why many choose to refinance, as you can continuously pay off your Mortgage at the lower interest rate.

Before you decide to remortgage keep an eye out on interest rates, as you wouldn’t want to refinance just before the interest rate drops. Consult with an adviser to ensure that you pick the best possible time. The lower your interest rate the better for you in the long run.

A downside to refinancing is that there are fees involved and you should be aware of all of them before you take the step to refinance. Keep in mind that application forms need to be done, your property needs to be re assessed and such and also you will be in debt for longer as you will be extending your remaining balance and time left to pay to a longer period

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