Have you ever wondered; can I remortgage and borrow more? If you have you are not alone, as online independent mortgage brokers who help clients all over the UK, we often get asked this and wanted to share with you what the facts are. Read on to find out more about remortgaging, whether you can borrow more and what you need to consider if you do!
How does remortgaging and borrowing more work?
I thought it might help with explaining what remortgaging means and how borrowing more works!
In simple terms, a remortgage is when you leave one lender and go to another. An example is when you come to the end of a fixed rate or some other special deal. And is usually because you want a better interest rate. You can read a lot more about it here.
When you remortgage, it’s an opportunity to have a full and thorough review and a time when you can change the terms of your mortgage.
In other words, when you remortgage to a new lender, you have the opportunity of changing many things!
You can change the term to make it shorter or longer. This can have the effect of making the mortgage cheaper or more expensive (which means you pay it off quicker or it takes longer!).
You can change the type of deal you want (i.e. fixed rate or something more flexible).
You can pay off some of the mortgages, or in this case, potentially borrow more!
All of which are subject to lending criteria!
In the case of borrowing more, in effect what you are doing is saying: “Hey Mr Halifax I’ve got a mortgage with Nationwide for £100k. Can I come over to you (remortgage) and borrow an extra £20k, making my new mortgage £120k?
So the question is, can you do this?
Can I remortgage and borrow more?
The short answer is ‘yes’ in theory!
However, like everything in life, it’s not always black and white!
It all comes down to two main factors:
- Is there enough equity in your property to pull out some more money
- Does your income support the total mortgage you now want?
So you can see, subject to those two points, the answer to ‘can I borrow more on a remortgage’, is yes!
Make sure you check out our remortgage page where we also have some helpful Remortgage FAQ’s which people often ask.
What do you need to consider when you remortgage and borrow more?
As you can see, remortgaging and borrowing more is possible.
It can help for lots of different reasons, and I’ve written about the benefits of remortgaging before which you can find here.
However, it’s critical to make sure you get independent advice. Don’t just rely on speaking to your existing bank. After all, they won’t be able to give you impartial advice.
Your independent mortgage broker will still be able to explore your existing lender options, plus look at the whole market. So why wouldn’t you do it?
But importantly, an independent mortgage broker, will make sure you are fully aware of the risks and help you plan for your financial future.
The difference is that most advisors are small business owners working in their communities and care hugely about helping their clients make the right choices. In contrast, in a bank, you are just another number!
Is borrowing more on your mortgage the right thing to do?
There is no absolute right and wrong answer, and it’s all about working out what’s right for you!
Short term borrowing more on your mortgage might be great, but it also depends what you are planning to do with the extra borrowing!
But don’t forget although you might be able to borrow more on a mortgage, it still needs to be paid off at some point!
Are there risks with borrowing more on a mortgage?
The other BIG consideration, is borrowing more on your mortgage, could end up costing you a lot more!
Don’t forget you might have this mortgage for years, which means the more you borrow, the more it will cost you overall!
Oh, and don’t forget a mortgage is secured against your home!
What does this mean for you?
If you don’t pay your mortgage, you could lose your home, and no wants that to happen.
Borrowing more on your mortgage might mean you get a low-interest rate and therefore, lower monthly payments. But if you default on your mortgage, you could lose your home.
How remortgaging and borrowing more can help?
It’s essential to understand the risks so you can make an informed decision.
An independent mortgage broker will thoroughly go through this with you as they have a duty of care.
However, there is no doubt, borrowing more on a mortgage can benefit some. Consolidating unsecured debt (credit cards, personal loans) can help reduce someones monthly outgoings.
However, as I’ve just said, there are significant risks!
It’s always best to get in touch before you do anything.
Even if you don’t borrow more Remortgaging can help
Remortgaging isn’t just about increasing your mortgage!
A mortgage is most peoples most significant debt and therefore, it is vital to manage this professionally and not jump into making decisions without exploring all options.
If you do, it could cost you!
Remortgaging is an opportunity to have a thorough review, save you money, and align your goals with what is possible.
It sounds boring, but it’s crucial to have a goal for your home and mortgage.
Do you want to pay it off quicker, pay it off by a certain age, or something else?
Whatever it is, an independent mortgage broker can help you explore this (which you might not have thought about before), and importantly help you make those goals a reality.