UK Mortgage Refinance
Options and advice for mortgage refinance in the UK.
Paying monthly mortgage interest payment is usually the biggest part of home-owners spending. Mortgage refinance is attempting to get the best possible deal for your mortgage by switching to a more competitive mortgage deal.
The market for mortgage refinance is very competitive. In fact many of the leading mortgage lenders offer better rates for those who are re mortgaging, rather than their existing customers. It is a bit of paradox; usually customers are rewarded for loyalty, but in the case of mortgages it is usually the other way around. Mortgage lenders are taking advantage of “borrower inertia”. This refers to those consumers (borrowers) who don’t want the hassle of switching mortgage dealer.
However the potential savings are very high from mortgage refinance. For example suppose you are on a standard variable rate of 6.5% (This is my current rate with Standard Life Mortgage). If you were able to get mortgage refinance then the cost of the mortgage could go down considerably.
Mortgage refinance need not just be considering a standard repayment mortgage term of 25 or 30 years. It may suit your financial situation to consider other types of mortgage options when you look into refinance:
Current Account Mortgage. This is where your mortgage is combined with your current bank account. If you have high savings you can use your current account deposit to reduce the value of your mortgage and therefore reduce your interest payments.
40 – 50 Year Mortgage. A 40 or 50 year mortgage will increase the total cost of your mortgage repayments. However it can reduce your current monthly payments.These longer mortgages may be a good idea if your current financial situation is poor. If you are really struggling perhaps you may consider this perpetual mortgage.
Tracker Mortgage Tracker mortgages have become quite popular and often offer a good discount on the Standard Variable rate. e.g. Tracker Mortgage at Alliance and Leicester
Will house prices fall? - when refinancing for equity withdrawal it is important to bear in mind that the house prices may not always continue to rise. Falling house prices could leave you with temporary negative equity so be careful of very ambitious refinancing options.
