When buying the house of your dreams, you have to look out for a lot of things, such as the financial burden that comes with becoming a homeowner. However, the world has changed in recent times because of the pandemic, which has affected many sectors, and the housing industry is no exception.
As of now, prices in the real estate market are at an all-time high. As inflation grows and unemployment spreads across the world, highly qualified people are working in the gig economy in hope of staying afloat, and many people are looking for other ways to combat this financial evil.
What Is Remortgaging?
To pay the piling bills, people are considering remortgaging as a way to pay them off but what they are overlooking is that this remortgaging can lead them down a dead end.
A remortgage is when you take out a new mortgage to replace your current one for either more or the same amount of money. While this may sound like a good idea if you want to get your hands on some cash, experts suggest otherwise.
Your House Is Not Your Financial Scapegoat
According to Claer Barret, who works at the Financial Times, many people are looking into remortgaging as they see that the property prices are soaring sky high but not ending well. UK Finance further supports Barret’s opinion as they discovered that over half of the homeowners who decided to refinance experienced the need to withdraw additional equity from their homes.
What Are The Issues That Come With Remortgaging?
Claer Barret talks about the risks that come with remortgaging. She mentions that the first drawback is the inevitable rise in the interest rates, making it even more difficult to pay the debt. If that wasn’t scary enough, another drawback is that your property value drops. Lastly, you won’t be able to service your debts anymore.
Despite holding such devastating disadvantages, there has been an increase in the number of people remortgaging their properties to help their families in need. Due to the increasing inflation, people are looking towards remortgaging as a means to help them get out of a sticky situation. It may seem like a good idea but it is only temporary and bound to become more burdensome.