Doesnt remortgaging cost you more in long run?

charliee_3

Just thinking... most people remortgage when their fixed term is up.. but doesnt this end up costing you more as the first few years you are mostly just paying off interest so the amount you owe will never go down if you never get past the first few years of the loan??

nobblyned

No, because you'll remortgage for a shorter term each time.

e.g. take out a 5 yr fix on a 25yr mortgage. At the end of the term you will remortgage for a 20 yr term.

If however you re-mortgage for 25yrs each time, then yes that is going to cost you more...

mlz1413

A few years back when re-mortgaging became popular it was because the new lender would pay for a valuation and solicitors costs so as long as the deal, ie interest rate and term, were better than current lender then it was worth moving.

Recently the lenders have started charging large admin fees like 1.5% or more of the loan value which means your unlikely to save money moving lender any more.

When working out a new deal take all the costs involved at the start and divid them by the length of the deal to give you a monthly cost and then add that the proposed monthly mortgage - if it works out at more than your current lenders SVR it's not worth moving.

Also remember some people are on interest only so the repaying bit is irrelevant to them.