Remortgaging home is something that many still talked about in hushed tones, associating it with being hard up, struggling to make ends meet.
However, while this is sometimes the case, remortgaging is often a smart move for borrowers to save on monthly repayments. In fact The Financial Conduct Authority’s Mortgage Market Study found that roughly 800,000 are currently overspending on their mortgages and could save £1,000 a year by switching. So why are we still talking about remortgaging in embarrassed whispered voices?
Research by MoneySuperMarket revealed that remortgaging is a widely misunderstood term. In the survey, three in five people admitted to not being sure of what remortgaging actually meant.
Almost half of the people surveyed associated remortgaging with negative connotations. While one in five admitted that they’d be embarrassed to admit they’d remortgaged their home.
This was linked to almost a quarter of those surveyed believing you would only remortgage to borrow extra funds. A further 8 per cent thought remortgaging your home meant you were in a ‘desperate’ situation.
To clear things up, remortgaging happens when mortgage holders come to the end of a fixed term. If they wish to remortgage, they can then chose a product transfer – when you stay with the same lender but transfer to a new fixed-rate deal or you move to a fixed-rate deal with a new lender.
The study found that while 9 per cent of those polled had remortgaged their homes to release funds. A fifth had done it simply to get a better rate.
‘It’s true that remortgaging can mean borrowing against your property – which might be an option for people who want to pay for home improvements or other debts,’ says Jameel Lalani, Head of Mortgages at MoneySuperMarket. ‘More often than not, it simply means changing your deal, either via switching to a new lender or by moving onto a new deal with your existing lender.’
‘If you choose not to do anything, your lender will often move you onto to its variable rate once your initial deal has finished – which is almost always less competitive,’ adds Jameel. ‘In light of that, it’s worth taking action and asking yourself should I stay, or should I go? Whatever the decision, it really pays to shop around, find the right remortgage deal for you and ensure you’re not unnecessarily overpaying.’
MoneySuperMarket has launched a new remortgage platform to help compare different deals.
If you do choose to remortgage make sure you’re getting the best deal.