Is remortgaging a good idea?

pauladkins

Hello All

I was thinking the other day about amortization, the fact that most of your payments at the start of your mortgage go toward interest and not repaying the loan.

I wondered if this meant that people could be seriously extending the term of there mortgages by remortgaging (or repeatedly remortgaging) and ultimately paying more over all even if moving to a better rate.

Does anyone know if this is often the case or if moving to a lower rate outweighs this issue?

Thanks

Paul

koexelek

If you keep within your original mortgage timescale, it is worth remortgaging if you can get a better rate.

If you keep extending your term each time though, it will cost you in the long run for the reasons you have stated

pauladkins

Cool - Thanks

Is it normal then to take a shorter term for the new mortgage?

I don't know as this really was just something that occurred to me while my mind was wondering (I know my mind could wonder onto much more interesting things than this) - so I've not really looked in to it.

Hope you (or someone else) doesn't mind sating my curiosity...

wymondham

Whenever you remortgage you should keep the end date the same as the first deal you had, or if you can, bring it forward (unless your deal allows you to overpay)...

beecher

It would be normal to keep within the 25 years to pay off your mortgage, so if you start off with a 5 year fixed rate, your next mortgage would be a 20 year deal. It does amaze me to read on here of people who remortgage to 25 years each time, as they must hardly be paying anything off their mortgage.

opinions4u

Strongest words of advice I could give people when remortgaging is NEVER increase your term. If you're 2 years in to a 25 year mortgage, remortage for 23 years or less.

Strongest words of advice I could give people taking out any mortgage - don't take a term out that takes the repayments past your eldest child's 18th birthday! Uni costs!

Easy to say. Harder to do. But try it!

pauladkins

OK - Thanks guys.

So basically don't extend the term and remortgaging is generally a good idea then...

Curiosity satisfied.

Cheers Paul

JimmyTheWig

A mortgage doesn't have to be for 25 years.

If you have a 25 year mortgage and remortgage after 2 years onto a 23 year mortgage you will be paying a similar proportion off your capital as if you hadn't switched.