As well as cheaper interest rates or the chance to borrow more, remortgaging can also provide access to a more flexible mortgage deal. This could help you to repay your debt faster and save money in interest. Here are some examples:
Unlimited overpayments: Most mortgage deals, even fixed rates, allow you to overpay by around 10% of your mortgage balance each year, without penalty.
But there are deals with no ERCs at all which means you can pay off as much as you like with no charge. If you are in the fortunate position to be able to do this, it can potentially shave years off your mortgage term and save thousands of pounds in interest.
Take an offset mortgage: If you have a lump sum in savings, this can be deducted from your mortgage balance to cut the cost of your repayments. For example, if you have £50,000 in savings, and a mortgage of £150,000, you’ll only pay interest on the £100,000 difference, while your savings remain intact.
Be aware however, that should you ever decide to spend these savings on other things, your mortgage repayments will increase accordingly. Also, offset mortgage deals tend to have higher interest rates than standard deals, so you would need to carefully consider the benefits of this option versus the relative costs.
