Why pay more? Remortgaging as a means of improving cash-flow

Whilst there can be little doubt that buying a home is a far more prudent option in the long-term than renting, the decision to take that first step onto the property ladder shouldn’t be taken lightly.

Indeed, having a long-term financial commitment, such as a mortgage, can stretch many people’s finances to the limit, leaving them with little money for life’s essentials, let alone life’s little luxuries.

However, one of the great things about having a mortgage on a home is that the house will nearly always increase in value. And assuming that more than the interest is being paid each month, the equity on a home can increase quite substantially in a relatively short period of time. So in effect, whilst someone may be counting their pennies every month, they could also potentially be sitting on a goldmine, and this is why many people choose to remortgage their home.

Moreover, whilst a standard bank loan may be a quick route to fund that much needed new car or new kitchen, interest rates won’t be nearly as favourable compared with that on a mortgage and by releasing the existing equity in the house, this can be a very effective way of funding those long overdue home improvements; not only does the house get the facelift it so badly needs, but it will also add significant value to the home in the long-run.

Of course, with debt being commonplace in countless 21st century households, many people choose to remortgage their home for entirely different reasons. When debt is spread across various different loans, credit cards or store cards, it can become difficult to manage, and by remortgaging a home and using the money to consolidate all the debts into one easy monthly payment, this is a far more sensible way of using existing capital to avoid having to take out further bank loans to cover the debts.

But whatever the reason may be for remortgaging the home this will, of course, mean that the monthly repayments on the mortgage will increase; but it is possible to minimise the effect of this by seeking a more favourable deal at the start of the remortgaging process.

Indeed, even if there is no intention of using the existing equity in the home to fund anything, it is still worth looking around for a new mortgage deal due to the substantial savings that can be made with lower interest rates and overall improved terms. And at the very least, it’s worth using a remortgage calculator to compare the existing home-loan agreement with what else is out there.

So, whether it’s to consolidate existing debts or to fund that new patio, kitchen or even new car, remortgaging the home is probably the most sensible way of quickly accessing cash. And by shopping around for a more favourable mortgage deal, a lot of money could be saved with very little effort.

Daniel Collins writes on a number of topics on behalf of a digital marketing agency and a variety of clients. As such, this article is to be considered a professional piece with business interests in mind.