One of the most important financial decisions a homeowner can make is whether to refinance their mortgage in 2023. Refinancing your mortgage can be a great way to save money over the life of your loan, but it’s important to weigh up both the pros and cons before committing to any kind of refinancing option.

Reviewing your mortgage with an advisor is a great way to get access to extra funds and make the most out of your biggest financial asset - your home. In 2023, remortgaging can offer you a range of benefits that can help you unlock financial freedom.

Pros of Refinancing Your Mortgage in 2023 UK:

• Lower interest rate: One of the main advantages of refinancing is that it can often result in a lower interest rate. A lower interest rate means you’ll end up paying less each month, freeing up more money for other things.

• Lower monthly payments: With a lower interest rate, you’ll also have lower monthly payments. This can be particularly helpful if you’re having trouble making ends meet or just want to reduce your overall financial burden each month.

• Additional borrowing: Refinancing can also give you the opportunity to ‘cash out’ some of your equity. This means you can use the money to pay for repairs and improvements on your home, invest in other properties, or just have extra cash on hand for any emergency situation.

Cons of Refinancing Your Mortgage in 2023 UK:

• Upfront costs: There are usually upfront costs involved with refinancing, such as appraisal fees, legal fees and lender costs. These can add up and should be taken into consideration before taking out a new loan.

• Longer repayment period: Refinancing usually involves extending your repayment period, which means you’ll be paying for the loan over an extended period of time. This can mean that you’re paying more in interest over the life of the loan.

Mortgage payments

Your monthly mortgage payments will change, whether this is an increase or decrease in payment will come down to the interest rates you have available to you at the time of remortgage. If you decide to take out any additional borrowing on top of your outstanding mortgage then your monthly payments will increase to pay back the additional money borrowed.

Remortgaging could also give you access to additional funds, allowing you to put the money towards home improvements, investing or debt consolidation. This can be especially useful if you have a large amount of equity in your home as you may be able to borrow more than you would under a standard mortgage arrangement.

We will also take into account your outstanding mortgage balance and if it makes financial sense to raise money from your current property as affordability is the main factor when applying for any type of mortgage.

However, if you are keeping your new mortgage balance the same as your existing mortgage, you may find a cheaper deal when looking for mortgage products with a broker. Interest rates will be lower if you do a like for like remortgage.

Can I remortgage early?

If you are looking to remortgage early before your fixed rate deal has ended, an early repayment charge/exit fees may be payable which will need to be taken into consideration when discussing your affordability for the new mortgage deal. We will always advise you to remortgage before your existing deal goes onto the lender's standard variable rate as this is a much higher rate of interest.

By considering a remortgage in 2023, homeowners have the potential to benefit from reduced monthly mortgage repayments compared to what they may be paying on their current deal, access additional funds or switch to a repayment mortgage - all of which could help you unlock financial freedom.

Finally, remortgaging in 2023 can also give you the opportunity to switch from an interest-only mortgage to a repayment mortgage. This means that you would pay off more of your debt each month and could help you become mortgage free sooner.

Interest rates

When researching the mortgage market you have to weigh up all of your options and mortgage rates. Your credit report has a big impact on the available interest rates for you. If you have a bad credit profile you will be offered higher rates compared to someone with a clean credit file.

Interest rates have been fluctuating over the past year as the property market has also shifted. Property valuations are starting to come back down after being at an all time high at the end of 2022. This means that mortgage interest rates are slowly but surely decreasing, this includes tracker rates and fixed deals.

How will I be assessed for a remortgage?

We will take a look at your payslips to confirm your income, providing a credit report is also important as this shows us any other debts that you may currently have, this is all taken into consideration when we review your current mortgage to refinance it to a better deal. If you are looking to remortgage to take out some equity to pay off existing debts, this is called debt consolidation, for more information visit our page here.

The mortgage term also plays a big part in this as the payments are cheaper over a longer period, it may take you longer to clear the mortgage balance but the mortgage payments will be more affordable for you and sometimes that's more important.

Ultimately, the decision to refinance your mortgage in 2023 should be carefully considered before taking any action. It can be a great way to save money over the life of your loan, but it’s important to weigh up both the pros and cons before committing to any kind of refinancing option.

Consulting a qualified financial advisor or mortgage broker can be helpful in assessing your situation and finding the best option for you.

It may be a cheaper option to stay with your current lender and this is called a product transfer, the interest rates may be better with the lender you are currently with. This means that your mortgage will be placed on a new deal but with the same lender.

If you are looking to remortgage, contact us today at 0151 662 0188 or email [email protected]