Remortgage or New Mortgage? Should you build or Move?

Deciding between a remortgage or new mortgage can be a tough choice, especially when you’re juggling the needs of your family and your career. It’s essential to make the right financial decisions that will benefit you in the long run. In this blog post, we will explore the pros and cons of a remortgage or new mortgage, helping you determine which option is best for you. So, if you’re torn between the two and looking for some guidance, keep reading to find out whether you should build or move when it comes to your mortgage.

Factors to Consider

When deciding between a remortgage or a new mortgage, there are several factors to consider. If you’re looking to expand your current property, a remortgage to fund an extension might be the way to go. On the other hand, if you’re ready for a fresh start and want to buy a new home, a new mortgage is the better option. If you are considering an extension for a growing family you may be considering the catchment for local schools, access to local amenities, healthcare and so on. Ultimately, your decision should depend on your financial situation, advice on your borrowing options, long-term goals, and personal preferences.

Financial Implications

When considering the financial implications of a remortgage or new mortgage either to build an extension or buy a new home, it’s important to sit down and calculate the difference in costs between the two. Remortgaging for an extension allows you to tap into your existing equity, potentially resulting in lower interest rates and fees. On the other hand, taking out a new mortgage to move home means starting fresh with a potentially higher loan amount and associated costs. Understanding these distinctions will help you make an informed decision based on your specific financial goals and circumstances. 

Remember that both will incur some costs. To move home you will likely be paying Stamp Duty, increasing your Council Tax, conveyancing and solicitor’s fees. To stay and extend you will need the services of an architect, there will be costs for your planning application, and other costs associated with your building works.

Living in a Building Site during Construction

Living in a building site during construction can be quite a challenge. The constant noise, dust, and disruption to your daily routine can be overwhelming. However, the end result of a beautiful new extension or renovation to your home can make it all worthwhile. It’s important to weigh the temporary inconvenience against the long-term benefits and decide if the disruption is worth it for you and your family. Of course the benefit is that you can see your vision for your new living space taking shape before your eyes! 

Cost Comparison between a Remortgage or new Mortgage

Extending borrowing to build an extension may seem like a convenient option, but it’s essential to consider the cost implications. On the one hand, extending your mortgage allows you to tap into your existing borrowing and spread the cost over a longer period. However, keep in mind that the interest rates for extended borrowing can be higher than those for new mortgages.

This means that in the long run, you might end up paying more in interest if you choose to extend your borrowing instead of opting for a new mortgage. Of course, if you are not in a fixed deal you have more options to consider. Weighing up and understanding those options is crucial, and taking advice from a professional mortgage broker can help you to fully understand the options, implications and costs.

Your Options as a Homeowner: Remortgage or New Mortgage

As a homeowner you are well positioned to be able to make decisions that suit you and your family. Whether your preference is to remortgage and extend or move home, understanding your options, costs and the implications of current interest rates are crucial.

It isn’t just about weighing up the short-term and direct costs of your preferred option, but looking at the long term outlook. 

Interest rates are slowly falling, and inflation is beginning to stabilise, for example. In the short-term could you afford to pay more on your mortgage, with a view to payments falling later on? Do the costs like Stamp Duty, conveyancing and so on outweigh any saving that you may make on a new mortgage compared to slightly higher interest rates on a remortgage?

The key is to fully understand these variables. And of course, taking professional advice from a mortgage broker can help you to weigh up your options and fully understand the cost of different options in the short, medium and long-term. 

Liddle Perrett Disclaimer
Most Buy-to-Let mortgages are not regulated by the Financial Conduct Authority
The information provided in this article was correct at the time of publication (November 2023)

Liddle Perrett Ltd is an appointed representative of PRIMIS Mortgage
Network, a trading name of First Complete Limited. First Complete Limited is authorised and regulated by the Financial
Conduct Authority.