The coronavirus pandemic has caused a lot of uncertainty and panic in the housing market with more people now seeking better savings opportunity from lenders.
While the traditional average mortgage term is about 25 years, many people are now seeking an extension of 30 years and above, especially first-time buyers. But depending on the kind of mortgage you’re eligible for, refinancing your property might offer you some benefits including getting a lower interest rate, having a shorter payoff term and a lower monthly payment.
However, the most immediate benefit of refinancing your property in the UK is that it helps borrowers who are in dire need of money, free up some space on their monthly budget for other expenses. This is particularly useful for those whose cost of living may have increased due to either taking on newer responsibilities or losing their jobs due to the impact of the COVID-19 crisis.
There are several ways to refinance a mortgage, one of which is raising more money by remortgaging. With average home prices increasing in the many regions in the UK within the past decade, homeowners are looking to make more money off the capital growth they have enjoyed over time. A borrower who has £200,000 left on their current mortgage might want to remortgage their property for £250,000, which would give them an extra £50,000 to spend on something more important to them.
Also, determining how much equity you have on your home can help when refinancing your property. You can even make a loan overpayment by paying extra money above the agreed monthly sum to improve your home equity, clear your debt faster and reduce the accumulated interest throughout the loan period. For example, if you still owe your current lender £200,000 on your property and it is now worth £500,000, it means you automatically have a £300,000 home equity.
If you are an expatriate and no longer living in the UK, remortgaging your property is essential once your fixed or discounted interest rates expire. Remortgaging the property would help raise more money that can be channelled towards other purposes such as paying a deposit for another property, consolidating your debt and making some home renovations.