A Fixed Rate Remortgage
A Fixed Rate Remortgage
If you are considering a remortgage it is important to remember that there is absolutely no reason to remortgage your home unless you get a fixed rate remortgage. Some lenders might try to sell you on the advantages of a variable rate mortgage, don't listen to them, the only one who will benefit is them. A fixed rate remortgage is the only type you should ever consider.
The reason that most people remortgage their home is to reduce the interest rate they are paying. There is little value to doing this if the new lower rate is only temporary, if the interest rates rise again in a few months you really won't be saving anything. If you are going to remortgage your home you need to lock in a fixed rate. There are a lot of fees involved in a remortgage, unless you get the benefit of a lower interest rate for the duration of the mortgage it is very unlikely that you will save enough in interest to make it worthwhile to to get a remortgage.
Unless you are saving on interest over a period of several years it is not really a good idea to remortgage. If you only have a couple of years left until your mortgage is paid off it is unlikely that you will save enough interest to cover the costs of getting a remortgage. Fees like legal fees and early repayment penalties can be quite hefty, it will take a few years for the interest savings to offset them.
Conversely if you have a lot of years left until your mortgage is paid off a remortgage is almost always a good idea if you can lock in a lower interest rate. Small reductions in interest spread out over the length of a mortgage can result in huge savings. Over the course of your mortgage you will pay more in interest than you do in principal, by several times, any reduction in interest rate is huge if you have enough time left until repayment.
People with variable rate mortgages are probably enjoying the low interest rates they are currently paying, just remember this won't last. Now is the time to lock in a fixed rate remortgage before interest rates go back up. Sure over the short term you will be paying a higher interest rate, this is the price of getting a fixed rate, but over the long term you will save a huge amount of money if you lock in a low fixed rate remortgage.
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