Just over years ago we started buying our first house. As DH had previously had a poor credit rating, although it had improved, we were advised to apply for a mortgage that was smaller than the maximum amount we should be able to borrow, and to put down the biggest deposit possible. As my work was a short-term contract, we applied for a mortgage equivalent to just under three time DHs salary, and put down a 15% deposit on the property. Due to this plan, and lying in the SE, we bought a modest property which although liveable, was always going to benefit from some modernisation.
Fast forward to now, DH has had a reasonable pay rise, rendering the original mortgage just over 2.5 times his salary. Our property has also increased quite notably in value (by almost 20%). So, we are now looking to remortgage, as by doing so we would own over 25% of the property and could secure a lower interest rate. When we enquirer about this, we were advised that if we extended our mortgage by 15k, to cover the modernisation work, this would still be the case. Based on the interest rates at present, we could actually reduce the length of our mortgage from 23 to 18 years and only be paying marginally more that we were on our initial fixed term.
So, we are aware of the costs associated with the remortgage and we appreciate that interest rates may go up, but are we missing any pitfalls? The idea of borrowing more moment, reducing the length of our mortgage and only paying a few more pounds per months sounds to good to be true. Is it? I'd really appreciate if anyone can highlight any risks/ problems we have overlooked.
(We have the income to cover some degree of increase in repayments).
TIA