You don't have to stay on the same deal for the life of your mortgage. You can refinance the loan, either with your current lender or with a new one. When might this be a good idea?
1. You Want a Better Deal
Your current mortgage deal might have looked good when you applied for the loan. However, it might not be the best deal for you right now. Changes in the lending sector and in your own circumstances might make refinancing a good option. For example, you might be able to refinance to a better deal with lower rates.
If interest rates have gone down since you set up your home mortgage, then a refinance could be a good financial move. Your payments could go down. Or, if your credit score has improved since you first set up your home loan, then lenders might give you better deals. They might offer to refinance you at lower interest rates to reflect your decreased risk.
2. You Want a Different Kind of Mortgage
The mortgage deal you set up initially isn't necessarily the right kind of deal for you now. For example, you might have taken an adjustable rate originally. At that stage in your life, you weren't worried about your payments fluctuating when interest rates changed.
However, if your finances have changed, say if you've started a family and one of you has given up work, then you might have less spare cash. Now, a fixed-rate loan might be a better deal. You'll know exactly how much you have to pay every month.
3. You Want to Change Your Mortgage Term
Some people refinance their mortgages to change the length of the loan. For example, if you're struggling to meet your payments, then making the loan term longer will reduce your interest repayments.
Or, if you are doing well financially, you might want to shorten the term of your loan. Here, you reduce the number of years over which the mortgage runs and your repayments increase.
4. You Want to Cash Out Some Equity
As you pay down your mortgage, your equity ownership in your home increases. If you want to tap into some of this money, then you might be able to use cash-out refinancing. Here, you refinance your mortgage for a larger sum than you owe on your current loan. You then get the difference to spend.
It's important to get expert advice before you change your mortgage. To find out more, talk to mortgage refinance professionals.