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Is The Time Right For You To Re-Mortgage?
By: Rhiannon Williamson
At certain times and in certain circumstances it actually makes more sense for
someone to re-mortgage than to stay with their current lender and ride the waves
of ever changing interest rates.
This article looks at five specific reasons to re-mortgage but first things
first I must just point out that the information contained in this article does
not constitute personal advice and because your circumstances and financial
position are as unique as you are, you should seek professional, regulated and
specific advice before re-mortgaging to ensure that this is the best decision
for you right now…
1) If your mortgage introductory or fixed rate period is about to expire you can
save substantial money over the period of your loan if you re-mortgage. You
avoid having to start paying your mortgage lender’s variable rate of interest
which is highly likely to begin at least one percentage point above that which
you have already been paying and which could increase your monthly outgoings
significantly. Over the lifetime of your loan just a one percent increase will
result in you paying back thousands in extra interest payments – money you could
save towards retirement, put in a fund for your kid’s college education or use
to actually pay off your mortgage faster…which leads me neatly to my next point!
2) Many lenders are trying to attract your new business and will offer you
attractive re-mortgage rates now which will reduce the amount you’re already
paying. If you can currently afford what you’re paying why not forego the
reduction and instead continue paying the same amount with the new lender and
pay back your mortgage quicker. The years or even months you can shave off the
term of your loan are years or months without interest payments which are years
or months you’ll be significantly wealthier.
3) If you’re not wholly comfortable with your current monthly repayments then
ignore point 2 and look at re-mortgaging to a cheaper lender and taking the
discount.
4) Make life simpler by considering a fixed rate mortgage so you don’t have to
worry about interest rate fluctuations and can budget more effectively.
5) If you have accrued equity on your property you could consider re-mortgaging
up to the new value of your property and using the additional funds to buy an
investment property from which you could either draw down a regular income in
the form of rent or which you could use for capital appreciation purposes.
With this extra money you could consider buying an overseas investment property
in a country with an emerging property sector which will initially cost you
less, let you and your family have a holiday home and remove expensive annual
holiday costs, you could also rent it out when you’re not using it to generate
an income to afford to pay for the property and over the long term this
property’s value could rise significantly. Later in life you might choose to
retire to this property or sell it for a nice lump sum that you can take into
retirement.
Examine your options carefully and remember to look at the bigger picture! If
you can profit from a re-mortgage then take the deal, but get expert advice and
assistance before entering into any investment decision.
About the Author:
Rhiannon Williamson is a freelance writer whose many articles about property investing and finance have appeared in publications around the world. Visit this link to read her latest articles about investment property abroad: - http://www.shelteroffshore.com/ |
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