Which Remortgage Deal You Should Go For?

In the last five years there has been a lot of development in the financial sector and since the market went through some all time lows during the global recession period. Financiers from across the globe came up with some really innovative ideas and thinking where they were able to raise money for themselves and for their families by paying some low interest rates schemes. The idea of remortgaging also came up during this phase because people were desperately looking out for other options where they could make money from what they already have rather than going for personal loans and housing loans that would instead worsen their financial stability and situation. However, remortgaging has various different categories and if you are planning to go for remortgage then you have to take a look into what different categories are available in the market.

Fixed Rate Remortgages

The word itself tells you that in this kind remortgages the interest rate are fixed when the agreement is reached by both the parties and therefore no matter whatever happens in the financial market the interest rates remains constant. People look out for such remortgage options when the interest rate is at all time low because they can quickly go for the remortgage and then keep the interest rates the same for around 5 years or whatever it the time period of the agreement. Hence, if you are a middle class person who has a fix income can go for fixed rate remortgages because you are sure about the amount that you will have to save for your interest rates. You can plan your monthly schedule accordingly every month and that resolves your financial problem to some extent as you don’t have to worry about the daily ups and downs in the financial market. However, the interest rates here are a bit higher than remortgages where the interest rates are flexible. This is for the security of the lender because the lender is taking a risk of giving you remortgage on a fixed scale even though the lender knows that the interest rates might go up in the near future.

The next best thing about fixed rate remortgages is that as a borrower you make a lot of profit from it. You not only get an idea of how much you will have to pay the interest but you also make profit when the financial market rises. When the financial market rises it is obvious that the interest rates might go up as well. However, your interest rates still remain where they are and therefore the difference between your stable interest rate and the current interest rate in the market is a kind of profit for you. However, it can also be the other way around when the actual market rates fall down below your fixed interest rates where others make profit and not you but that is very unlikely.

However, in the fixed rate remortgage the lender is an agreement with you and therefore you will need to be very sure about the entire agreement period. If you want to payback your remortgage any given point in time during the agreement period then you will have to pay 2% to 3% early repayment charge also known as ERC. In some cases the ERC can go up to 6% high and that is why you need to plan your fixed rate remortgage very carefully taking into consideration all factors that can happen during the agreement period. Secondly, when the remortgage period ends and if you are not able to find another remortgage deal then the lender can decide to go for variable interest rate as per market situation. Hence, if at that point if the market rates are high then you will be in a big problem as your monthly charges will shoot up substantially putting you in a financial difficulty. Hence, a good workaround is that you start looking for better remortgage deal three to four months before the expiry of your current deal.

Tracker Remortgages

The word tracker comes from the point that here the interest rates of your remortgage deal will follow the interest rates of the bank. Hence, in a tracker remortgage deal the interest rates are fixed initially and usually the interest rates are a bit higher than the bank

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