7 Reasons Not To Remortgage

7 Reasons not to Remortgage

If your initial mortgage deal is coming to an end, you might be considering remortgaging to a new deal with a different lender. There are many reasons why people remortgage, from lower mortgage payments to funding home improvements, but there are also some reasons why you might not want to.

Here are a few things to consider before making the decision to remortgage.

1:- You could end up paying expensive early repayment charges

One common reason why people remortgage is to take advantage of a lower interest rate. However, if you have an outstanding balance on your current mortgage, you may end up having to pay expensive early repayment charges to your lender in order to switch deals.

Early repayment fees are common with fixed-rate mortgage deals, so it’s important to check the terms of your mortgage before making the decision to remortgage.

A large early repayment charge can often outweigh the potential savings from a lower interest rate, so it’s important to do your sums before making a decision. For example, if you have a £200,000 mortgage and have an early repayment charge of 3%, this would equate to a £6,000 fee. If you have a small mortgage balance, the early repayment charges are less likely to be an issue. However, if you have a larger mortgage, it’s worth considering whether remortgaging is worth it.

2:- You're in negative equity

If you bought your home at the peak of the market or took out a high loan to value mortgage, it’s possible that the value of the property has decreased in value since you bought it. This is known as being in negative equity.

If this is the case, you may find it difficult to remortgage away from your current mortgage deal as most lenders will only offer loans to people who have at least a 5% deposit. If your mortgage debt is higher than the value of your home, it may be worth waiting until the value of your property has increased.

3:- If you’re not planning on staying in your home for long

Another reason why you might not want to remortgage is if you’re not planning on staying in your home for very long. This is because when you remortgage, you’ll usually have to pay fees including valuation fees and solicitor’s fees.

If you’re not planning on staying in your home for the long term, it may not be worth remortgaging as you could end up losing money in fees that you would need to pay again once you move home.

It’s also worth considering that if you do want to sell your home in the near future, you may not have paid off enough of your mortgage to cover the costs of selling your home and you could end up in negative equity.

4:- You might not be eligible for a remortgage

Another reason why you might not want to remortgage is if you think you won’t be eligible for a new deal. This is because your circumstances may have changed since you took out your original mortgage, and this could affect your chances of being approved for a new mortgage deal.

For example, if you’ve had a change in income or have been made redundant, this could impact your eligibility for a remortgage. It’s also worth considering that if you’ve been struggling to keep up with your mortgage payments, your credit rating could have been affected. This could make it more difficult to be approved for a new mortgage deal, and you may end up having to pay higher interest rates.

5:- Your mortgage balance is too small

Another reason why you might not want to remortgage is if your mortgage balance is too small. This is because the fees associated with remortgaging can often outweigh the potential savings that you could make.

Even if your monthly payments as small, the fees associated with remortgaging can add up. For example, if you have a £60,000 mortgage and are paying £500 a month, it would take 10 years to pay off your mortgage. If you were to remortgage, you may have to pay valuation fees, solicitor’s fees and other costs which could total a few thousand pounds.

In this scenario, it may not be worth remortgaging as you could end up paying more in fees than you would save in interest.

It’s also worth considering that if your mortgage balance is small, you may not be eligible for some of the more competitive deals on the market. This is because lenders often have minimum loan amounts that they will lend, so it’s worth checking this before you apply.

6:- If you’re happy with your current deal

If you’re happy with your current deal, you may not want to remortgage. This is because you could end up paying fees to switch deals, and you may not be eligible for a more competitive deal anyway

Of course, if you’re on a standard variable rate (SVR) mortgage, it’s worth considering remortgaging to a new deal as you could potentially save money. However, if you’re on a competitive fixed-rate deal, it may not be worth switching to a new deal as you could end up paying more in the long run.

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7:- Interest rates have increased

Rising interest rates could mean that you already have the best deal on your existing mortgage. If interest rates have increased since you took out your mortgage, the chances are that any new deal you’re offered will have a higher interest rate. This means that you could actually end up paying more if you remortgage.

Before you decide whether to remortgage, it’s important to compare the interest rate on your existing mortgage deal with the rates on offer from other lenders. This will help you to see whether or not remortgaging is the right option for you.

Speak to a remortgage expert

The above are some of the key reasons why you might not want to remortgage your home. Of course, it's important to speak to a remortgage expert before making any decisions, as they will be able to advise you on the best course of action for your individual circumstances.

At Teito, we work with 90+ mortgage lenders and have years of experience helping people remortgage their homes. We can help you to compare the deals on offer and find the right deal for your needs. Getting started couldn't be simpler, just enter your details and start comparing today.