Your mortgage is not just a matter of settling on a plan and paying it off. A lot of factors play into creating your mortgage plan, and it, in turn, can affect the way you live for the next five to twenty years. When the parts of your lifestyle that help establish your mortgage change unexpectedly, you must be able to adjust. When life throws you a curve ball, you need to look at alternate ways to improve your mortgage situation.
It is essential to adjust to changes like decreased income or additional expenses, especially when they seem like long-term changes. Failure to make your payments may cause you to lose your house and everything you worked to pay off. Here are things you need to know about the alternatives for your mortgage:
What is a product transfer?
A product transfer is when you are looking at other plans/products with the same lender. There are two cases when a product transfer may seem ideal. The first is when your circumstances change, and you are looking at a different payment method. The new alternative could be smaller payments over a more extended period. The second is when your lender offers better rates, typically lower, with a different plan. Even though your circumstances haven’t changed, and you can comfortably pay your current rates—shifting to a new plan could give you more room financially. The two cases may seem similar with the end goal being a new product with lower rates, however, what prompts people to look at other products are different. The first is because of necessity and the second is by choice.
The benefit of a product transfer is that you know the company well enough and they know you. You do not have to go through the same amount of paperwork when you initially got your mortgage. They might ask you to redo certain papers, but it is mostly to update your information. To know more about product transfer, contact your mortgage adviser and see if you are missing out on any deals from your lender.
What is remortgaging?
Remortgaging is a term that is often confused by homeowners with product transfer since they both seem to look for lower rates. Remortgaging, though, is about shifting your mortgage from one lender to another. This jump between companies often happens when a competitor has lower/better rates. You can get extra help with remortgaging through websites like mortgage-wise.co.uk.
The benefit of remortgaging is that you find a better fit for you and your circumstances. However, you need to be able to look at the fine print. Before remortgaging your home, double check if the rates are ultimately worth it after you consider the fee for changing your lender and paperwork for the transfer. If there are no extra fees, or if they aren’t as expensive as you thought, the change might even pay for itself.
Since there is a distinct difference between the two, which one is better? There is no one answer to that because it all depends on when these opportunities present themselves.