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Remortgage Deals When the mortgage rate is lower than your existing mortgage interest rate, remortgaging  can provide you with much more free cash. However, along with these benefits can come some disadvantages, especially if you are tied in longer than the headline rate.
It is important to compare the best mortgage deals on the market in order to give you the best rates avalable.

Fixed rate or variable rate ?

There are two main types of remortgage deals that exist ion the market: a “fixed” rate or a “variable” rate. Both have advantages and disadvantages, and it is important to consider the options carefully to find the best mortgage to suit your cicumstances.

A fixed rate mortgage requires the customer to pay the agreed fixed rate of interest (which may be slightly above the normal rate) for the duration of the fixed term. In contrast, a “variable” rate  requires the customer to pay the current prevailing rate of interest in the market at any point in time.

Therefore, if the rate of interest goes down, the customer pays the lower mortgage that month, however, if the rate increases, the customer pays the higher rate. This is where both the advantages and disadvantages of both mortgages exist.

If you take out a fixed rate remortgage  and the rate of interest goes up you gain by having to pay the lower fixed rate  however  if the rate goes down then  you lose because you continue paying the higher rate.

Variable rate mortgages may appear to be a good deal but you embark on the risk-to-reward gamble. Yes, you may be rewarded because you will pay a lower rate when  the interest rates  fall however your risk increases because you will pay a substantial amount more in interest in the long-run when rates rise.

Fixed rate mortgages insure you against any increases in the interest rate. If the rates do fall, then you will lose out.

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