Should You Consider Re-Mortgaging Your Home?

Should You Consider Remortgaging Your HomeWith mortgage rates dropping and house prices rising, many people are looking to take advantage by re-mortgaging their homes. There has been a recent re-mortgaging increase of 9% on the monthly average in the UK, highlighting the fact that homeowners are really seeing the value in the current market. But is it the right decision for you?

A re-mortgage allows you to essentially stop paying on your old mortgage before it is paid off. Instead, you can then take the proceeds from your new mortgage to cover that old one.

While that may seem desperate to some homeowners, it can save you from having to foreclose on your home, free up some money for another major purchase or help you get a better deal on your mortgage. It also gives you more time to pay for your home, which means you can just relax a little and not have to worry so much about the demanding payments of that first mortgage.

There are definitely some benefits to having some extra cash on hand. The re-mortgage gives you upfront cash to do with as you please. Most people use that as a way to put themselves in a better situation financially. They may pay off large debts and make sure they are able to meet their financial responsibilities for years to come. This can be the perfect opportunity to pay off something that you have been paying for years or to finish off a debt that you were close to paying off.

You can also use it to give your home more value. Many homeowners take the new mortgage money and repair or upgrade their home. It is the perfect time for them to get that new kitchen they wanted or to refurbish the bathroom. This not only makes the house a better place to live, but it also adds real value to the home that can make it easier to resell it later.

Many people decide to take out a second mortgage on their home not because they can no longer afford to pay their original mortgage but because paying that mortgage puts them in a tight spot financially. It may keep them from making improvements or paying debts that they want to take care of. Taking out the second mortgage gives them some temporary freedom. Now it may seem disingenuous to take out more money to pay for debts already accrued, as it can seem to continue a cycle of debt. But it can be a smart move if the money is leveraged properly.

For instance, the debts paid off by that mortgage money could have higher interest rates than the mortgage does. That would mean that the homeowner is actually saving money over the long run. Taking out that mortgage may also free up some funds for major life changes. Perhaps a new child is on the way or one of your children is getting ready to go to university. The extra cash allows the family to pay for those changes without putting themselves behind on their mortgage payments.

If you feel constrained by your current mortgage and you can definitely improve your situation by a cash influx, then re-mortgaging your home may be the right decision for you.

 

Join our newsletter

If you like Critical Financial, subscribe and get our latest content via email.

Powered by ConvertKit

Share this post:

Recent Posts

Leave a Comment

*

People count the money to buy a house in future success.

Avoiding Mortgage Scams: Don’t Fall for Unreasonable Promises

If it sounds too good to be true, it probably is. That’s sound advice for almost all aspects of life, including the search for... more →
Eat for free for a whole month via the meal kit companies discounts for new customers.

How To Get a Month of Free Food: 9 Meal Kit Companies Offering Discounts to New Customers

Play your cards right and you might be able to line up a month’s worth of free meals if you were to try out all nine of the meal... more →
Generate extra cashflow -- here are 97 ways.

96 Awesome Ways to Generate Extra Cashflow

Who doesn’t want more money nowadays? We’ve got you covered on that front. Here comes a long list of different ideas on... more →
Valentine's Day gifts that won't destroy your budget

Valentine’s Day Crafts Are Romantic Rescue from Crazy Inflation

Fall for the hype this week and you’re out an average of $143.56 for Valentine’s Day. Crafts and other do-it-yourself tactics... more →

Ultimate Guide to Bitcoin — FREE Ebook!

Have we got something for you: a free ebook about bitcoin! more →
Get a flu vaccine.

Why You Need To Get a Flu Vaccine Right Now

Flu vaccines aren’t just for the elderly  anymore. Here are 25 reasons you should go get vaccinated. more →
Financially successful

Acquire the Trait All Financially Successful People Have

Financially successful people tend to all have a lot of self-discipline. Improving your discipline in one area of your life often spills... more →

What’s the Best Free Recipe App?

The Apple Store and Google Play together offer more digital cookbooks than you probably have room for on your mobile device. So which... more →
New tax law might slow down housing market.

What Will the New Tax Law Do to the Housing Market?

The new tax law will have a profound impact on the housing market, although in ways that go beyond the deductibility of mortgage interest... more →

4 in 5 Households Will Get a Tax Cut in 2018

Four out of five U.S. households will get a tax cut as a result of the legislation that President Donald Trump signed into law today. more →
Will bitcoin reach $100,000?

When Will Bitcoin Reach $100,000?

Bitcoin has accelerated its pace of appreciation in recent months, and if the current levels between $15,000 and $19,000 make you itch... more →
The Dow Jones topped 24,000 -- now what?

The Dow Jones Crossed the 24,000 Threshold. Now What?

Stocks appear to be increasing in volatility, yet the markets closed on Monday, December 4 with the Dow Jones Industrial Average is... more →
Peer mortgage

Should You Get a Peer-to-Peer Mortgage?

If you can’t get approved for a home loan from a bank, you might want to look into applying for a peer-to-peer mortgage. more →
Investment gifting is awesome.

4 Things To Know Before You Donate an Investment

While donations of any kind are appreciated, gifting investments benefits both the giver and the receiver. Here are four key things... more →
Are you wondering: What's the Relationship Between the Stock Market and Federal Debt?

What’s the Relationship Between the Stock Market and Federal Debt?

Wouldn’t it be wonderful if gains in the stock market could actually reduce U.S. government indebtedness? If that were true,... more →
Credit Card Rewards, credit card

Beef Up Your Credit Card Rewards With This Technique

I stumbled across a book called Do More, Spend Less by Brad Wilson.  Brad runs the site bradsdeals.com, which I find very informative.... more →