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What is remortgaging?
When you want to make changes to the mortgage you currently have, whether that’s changing Mortgage Lenders or looking for a better deal with your current lender, you can do this by remortgaging. This is known as a Product Transfer when you stay with your original lender.
If you’re looking to change your existing mortgage from an Interest-only to a repayment mortgage, most lenders should be able to arrange this without you remortgaging.
When should I remortgage?
There are a wide range of reasons that you might consider remortgaging, but in order to maximise the benefit, it’s incredibly important to ensure that the timing is right for your current circumstances.
Here are some times where you can benefit from remortgaging:
Your fixed interest rate is ending
Fixed-rate Mortgages vary in length, and when the initial fixed period ends, your mortgage will revert to your lender’s Standard Variable Rate of interest, which is always higher than Fixed-rate deals.
A rise in the Bank of England base rates
For non fixed-rate mortgages, your monthly repayments are affected by fluctuations in the Bank of England base rate of interest. Although this is currently set at only 0.01%, a rise can occur at any time.
Your property value increases significantly
It’s a good idea to keep your eye on the property market because you can benefit when your property increases in value. The more your home is worth compared to when you bought it, the lower the Loan to Value rate of your borrowing is. Lenders often provide very competitive interest rates to those with low Loan to Value borrowings.
Your mortgage terms state you can’t overpay
If you’re in a position to do so, overpaying your mortgage can mean that you can pay off your mortgage earlier than intended or reduce your monthly payments. Many mortgage terms don’t offer this, however, so you could consider a more flexible mortgage with another lender. Bear in mind that exit fees are likely to be due on your existing mortgage, however.
To borrow more money
If you are looking to finance home improvements or a large one-off purchase, such as a car, remortgaging can be an option for some people. It is also often used as a method of debt consolidation, however, costs should always be weighed up against a standard loan, which may provide a cheaper option.
For a more flexible mortgage
If the terms of your mortgage are quite restrictive, you might want to consider a more flexible mortgage, which can often give the option to take payment holidays or offset your savings against your mortgage interest.
Speak To An Expert
We provide professional, friendly and accessible advice and support throughout the mortgage application process, and are able to offer recommendations and referrals to trusted conveyancing and estate agent colleagues too.
When is remortgaging not a good idea?
There are high early exit or repayment fees
If the early repayment charges and exit fees you’d incur from leaving your current mortgage outweigh the savings you would make by remortgaging, there is no benefit to doing so.
You already have a competitive rate
When you already have a competitive rate of interest, it’s less likely that remortgaging will provide you with any benefits, due to the costs involved. There are mortgage calculators that can help show if this would benefit you.
Your remaining debt is very small
If you owe £50,000 or less on your current mortgage, the fees involved with remortgaging will probably outweigh any of the potential savings you would make from a more attractive mortgage deal.
Your financial circumstances have declined
A remortgage application is similar to a mortgage application in that your affordability and credit score is assessed. If your financial circumstances or credit rating have declined, it’s unlikely you will be accepted for a remortgage unless you have a large amount of equity in your property or a very large deposit.
You have negative equity in your property
If you owe more than your property’s current value you have negative equity. Lenders will not offer a remortgage to anyone in these circumstances.
What fees are associated with a remortgage?
The remortgage application process is very similar to your original mortgage application. You should expect to pay:
- Arrangement fees
- Booking fees
- Legal fees
- Valuation fees – in some cases, particularly if the market has changed or you’re moving home
You won’t usually need a deposit, but it can improve the chances that you will secure a remortgage in some cases, for example, you have low equity in your property.
How can Mortgage Broker Services help?
Here at Mortgage Broker Services, we’ve helped lots of people find the best time to remortgage their home. We consider your individual circumstances alongside the status of your current mortgage in order to point you in the direction of lenders who are most likely able to help you.
Having access to a broad selection of high street and specialist mortgage lenders means that we can more easily access those deals that will provide the most benefit to your remortgage needs.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.