Are you thinking about remortgaging? If so, why? Many people will be looking to take advantage of record low mortgage rates to keep their repayments in check for as long as possible, and some find that in doing so they're able to ease cost of living pressures – but others are actually increasing their loan size in order to cope.
Research from LMS has found that, even though 64% of remortgage customers in December took the plunge to take advantage of lower rates, 24% did so to increase the size of their mortgage and free up capital. Those who did this typically increased their loan by more £1,000, while 17% increased it by as much as £10,000. Boosting their bank balance in this way meant 19% of homeowners were able to fund home improvements, while 9% were planning to use the extra capital to consolidate their debts, and a generous 1% planned to use the money to help their children.
However, the majority still want to remortgage for the potential to secure a lower rate – and therefore lower repayments. The figures show that 37% who remortgaged were able to make a monthly saving of up to £500, and 3% were able to save even more than this, which could have a huge impact on outgoings and make the rising cost of living far easier to cope with. It could even be possible to stash those monthly savings away to eventually use for similar purposes as those who release capital, all without adding to the loan amount!
Arguably, this would be a better long-term solution, as the ultimate aim of any homeowner is to be able to pay off the mortgage by the end of the set term. Adding to the loan amount will make it a lot more difficult, so if you can, it's worth trying to avoid going down this route, and instead make the most of the monthly savings you can enjoy by remortgaging to a better deal.
Andy Knee, chief executive of LMS, comments on the findings: "With a plethora of competitive rates currently on offer, savvy borrowers can snap up a good deal to boost monthly finances at a time when many households feel strapped for cash – especially after what for many will have been a Christmas splurge.
"Borrowers should not be complacent, however, as competitive rates will not be around forever, and with a cooling in the wider mortgage market, now may be the best opportunity to shop around for offers and provide an injection of cash to your monthly budget."
So, is it time to consider your options? There are some truly great deals to be found, particularly if you've managed to build up a decent amount of equity, and you could find you're able to shave hundreds of pounds off your monthly outgoings. Start considering your options by checking out our remortgaging best buys, and see if you could ease cost of living pressures for the foreseeable future.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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