Do you own your own house? If the answer’s yes and you are in desperate need of some money then you might want to consider remortgaging.
Remortgaging is when you borrow money from your mortgage lender, using your house as collateral. If you borrow your property’s entire value then you will have to restart mortgage payments.
If you are interested in remortgaging then you need to spend some time learning about the advantages and potential disadvantages of it; putting your house up for collateral is a big decision and isn’t something that should be taken lightly.
Here is everything you need to know:
Finding a Reliable Lender
Does remortgaging your house interest you? If so then rather than taking out a mortgage with your existing lender it might be worth taking one out with another. There are hundreds of different online mortgage lenders for you to choose from. Beyond finding a lender it’s also wise to find an advisor. Talking to experienced remortgaging experts can help you to make a better decision. Nobody you talk to other than a mortgage advisor is going to be able to give you accurate insight into how your decision could potentially impact your life. Mortgage advisors are very affordable and do not charge large fees for their time. Ensure you read your chosen advisor and lender’s reviews before working with either of them so you can be confident they offer a superior service to their competitors.
Instant Cash Release
One of the best things about remortgaging your house is that once the paperwork is done and everything has been sorted out you get your money right away. Your bank will pay the money straight into your account. Because you get the money immediately it can be used in emergency situations or to help out loved ones with plans or even to start your own business. The payout times vary from lender to lender so before you commit to remortgaging make sure that you do your research and find out how long your chosen lender takes.
Risk Losing Your House
One of the main risks of remortgaging is losing your house. Obviously when you remortgage your mortgage goes back to square one. If you then do not make payments then your house can be seized by the bank. Remortgaging is therefore an important consideration and shouldn’t be decided upon overnight. When you remortgage you lose all of the equity in your house. Losing equity means that you don’t own as much of your house (or any of it) going forwards and will be beholden to your lender’s rules and regulations.
Higher Repayments
Another risk you run when you remortgage a house is that you could potentially end up having to pay higher monthly payments. The reason for this is because of interest rates. When you remortgage you have to take out a new mortgage which means you will have to take one out that has been priced according to the interest rate on the day that you sign the agreement. Interest rates fluctuate and right now they are very high. A higher interest rate means that you will have to pay more each month as your plan’s price will increase overall.
Longer Time to Full Ownership
In addition to costing more, when you remortgage it then takes you longer to fully own your house. With interest rates rising more and more Americans are losing their houses as they are unable to keep up with price rises. If you are in a good financial position then remortgaging is probably not going to be a big deal for you. However, if you are short on money then it might not be sensible. You’ll be paying more money for longer than you originally would have. Ensure that whatever you are remortgaging for is profitable in and of itself so that you don’t have to worry about not being able to make payments in the future.
Discussion With Your Partner
Few people take out mortgages independently. More often than not it’s something done with another person, i.e., because of marriage or relationship. If your mortgage agreement has another person’s name on it then before you even consider remortgaging make sure that you speak to them about it. Remortgaging your house without their permission is actually illegal. As a remortgage will affect their lives as much as it will yours you need to sit down and talk about the advantages and disadvantages with them.
Remortgaging one’s house can be an effective way of getting money fast. However, it can also be a pretty good way of losing one’s house. If you are in desperate need of money and remortgaging interests you then speak to an advisor first so they can properly advise you.
Read more:
Should You Remortgage? Here’s Why or Why Not