Mortgage Refinancing: Things to Think About!

Mortgage refinancing has changed the way people think about their financial situation and home. Many consumers have learnt that mortgages are not just a method of purchasing a house, but also a method of raising cash.

You can generate cash by refinancing your house and releasing some of the equity. Many houses have increased in value substantially over the past few years. If you have not had your property valued recently you might just find out that you have more equity than you imagine.

Mortgage refinancing can be used by people with bad credit and debts to improve their situation, the money raised by refinancing can be used for debt consolidation enabling you to pay off expensive credit cards, loans and any other debts you may have. This can help reduce interest payments and help ease the financial pressure in the short term. By extending the term of these debts you could end up paying back more. You should also take into account that you are securing these debts against your home.

Reasons for mortgage refinancing

We know you are interested in a remortgage (as it's more commonly known) and we know you want to improve your financial situation, otherwise why would you be reading this information? But it is important to think about your motivation for refinancing your mortgage. Here are some mortgage refinancing motives for you to consider.

To pay off debts and credit cards

Consumers are becoming more reliant on credit cards and personal loans but while it is fun spending the money or maybe making essential purchases on your credit card the interest rates are very expensive and can soon add up to a substantial debt. By remortgaging and releasing some of the equity in your home you can pay off your debts and credit cards which can save you money in interest payments in the long run.

Lower monthly mortgage payments by switching to a different type of mortgage

You may be paying a higher interest rate on your mortgage than you need to. When interest rates are lower than what you are currently paying then changing your mortgage to one with a better rate will help reduce your payments, improve your financial situation and help get you out of debt. Mortgage refinancing can enable you to change the term of your loan, consolidate your debts and secure a lower interest rate. This can reduce your monthly mortgage payments saving you money both monthly and over the life of the loan, therefore improving your financial situation.

To raise cash

As we mentioned above refinancing a mortgage is becoming a more common method of raising cash - the interest can be lower that that of a credit card or personal loan. The cash you raise can be used for any purpose like your children's university, investments, and asset purchases like a car, or simply to treat your family to a holiday. You can remortgage to raise cash for home improvements that will actually increase the comfort of your property, like an extension or a second bathroom (if you are considering this check planning permission first).

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