Why should you Remortgage?

17th April 2019


Have you noticed that your mortgage repayments have increased slightly? This may be because your current deal has come to an end and you have been placed on the Standard Variable Rate (SVR). Avoiding these higher costs is one of the many reasons why you should consider remortgaging. 


What is Remortgaging?

Remortgaging is the process of taking out a new mortgage product on a property you already own to replace your current mortgage deal and save money. This could be to allow you to borrow more to help with home improvements or to boost a deposit for another property.


Why you should Remortgage?


You’re on the SVR

As described, when your current mortgage product comes to an end you will automatically be placed on the Standard Variable Rate. All mortgage lenders set their own SVR, which can go up and down at any time.

It’s important to note that the SVR can be influenced by the Bank of England base rate but unlike tracker mortgages, the SVR does not track above the base rate at a set percentage. Instead, the lender can choose to raise or lower the SVR as and when.

Because the lender has full control of the SVR and can choose to increase or decrease it at any time, it can make budgeting for your monthly mortgage payment difficult; if your monthly payments increase too much, it could affect your ability to keep up with repayments.

As of January 2019, the average SVR is 4.9%. As SVRs are not known for being the most competitive rate on the market, it’s likely you could reduce your monthly mortgage payment by switching to a fixed rate or tracker mortgage.


You want to make home improvements

If you’re thinking about converting the garage into a bedroom or installing a new kitchen, remortgaging could help you spread the cost. Not only will remortgaging save you money on your monthly payments but you may be able to ask your lender for additional borrowing. This could help you to make home improvements, pay off the remaining help-to-buy equity loan or buy the additional or final share in a shared ownership. You can find out more about additional borrowing here.


The value of your home has increased

Since taking out your mortgage, if the value of your home has increased, you may be able to secure a lower rate as you are in a better ‘loan-to-value’ position. Usually, lenders offer their most competitive mortgage rates to borrowers who they consider to be lower risk – ideally those who have a big deposit or own a substantial amount of equity in their property when remortgaging. You can check your current property value on house hunting sites such as Rightmove and Zoopla.


You can be more flexible

As a Contractor, you can be at risk of gaps in employment when you are between contracts. With some mortgage lenders, you can enjoy a payment holiday. This is where an agreement is made with your lender that allows you to temporarily stop or reduce your monthly mortgage repayments. Does your current provider allow you to this?


*If any of the terms above weren’t familiar, get to know mortgage terms with this helpful guide*



If you’re looking to remortgage and want to find out what kind of deal you could secure, get in touch with our expert Mortgage advisers today. We consult the whole of market, working with Contractor friendly mortgage lenders who aren’t worried by your day rate, and help you understand why should you remortgage as a Contractor. 


All content is accurate at the time of publication

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