According to the Council of Mortgage Lenders, the amount of households using a remortgage has increased by 30% over the past year. A remortgage might be done for various reasons but should never be taken lightly. August saw an increased in the amount of properties that pursued a remortgage option, with 30% more in volume and value totalled.
Careful Consideration
A remortgage should be considered carefully, as it is in all actuality another loan. When you remortgage, you borrow money against the value of your house. If you cannot repay the loan, you then would lose your house.
People remortgage their homes for various reasons, some highly significant ones and others not so great. You might consider a remortgage in order to get a large sum. If the amount of interest and the amount you will pay in total is less than that of other debts you might have, which is unlikely, then you might consider a remortgage in order to help consolidate your loans. If you have an emergency, either in regards to any illness or injury, or something less threatening to life but detrimental to other areas of life, you might use a remortgage to help you pay for that.
Another option, and one that is increasingly popular, is to use a remortgage to make home improvements or buy more property—an investment in the property market. Through this, your remortgage will either increase the value of your home or give you sufficient income to be able to pay back your remortgage a bit more quickly.
Don’t Spend It Superfluously
You should never use a remortgage to fund a holiday or other impractical expenses. Borrowing against the value of your home can be very risky and you should ensure that it is the right option before following through. Despite the risks however, a remortgages can be a good idea, as long as you make sure to plan ahead and budget carefully around it. You should use the option to remortgage your home only if you are going to make money from it. With all the financial hardship going on, you may think this is hopeless, but now is the perfect time.
Firstly, if you are using your remortgage for home improvements, hoping it will increase the value of a house you will sell in the future, you should be aware that today’s market has extremely low housing prices, affordable if you qualify for the mortgage. If you remortgage your home, depending on the home you want to purchase, you will be able to use that money to pay in full for the house. Secondly, using your remortgage to fund a second, rental property, is perfect timing in this market of renters.