Remortgages

What is Remortgaging?

Remortgaging is simply changing your current mortgage deal. Most homeowners choose to remortgage when their current deal comes to an end as without remortgaging, you would automatically fall onto your lender’s Standard Variable Rate. This could lead to you paying significantly more interest than you need to on your mortgage.

As well as securing a better rate, You can remortgage to release equity from your home for such as home improvements or to consolidate debts.

When it comes to remortgaging you can opt a product transfer whereby you fix a new rate with your current lender, or you may remortgage to a new lender. A mortgage adviser can review your circumstances and best advise you on which option to take.

When is a good time to Remortgage?

There are several reasons to remortgage your property and it’s always worth speaking with a mortgage adviser to discuss your options and see if remortgaging is the right decision for you. For example, you may wish to remortgage if:

Your current mortgage deal is coming to an end

When you take out a fixed rate mortgage, you fix the rate for a set time period. When your fixed rate comes to an end, you automatically go onto your lender’s Standard Variable Rate (SVR). This will be at a higher rate than you originally fixed for and therefore your monthly payments will increase. You can choose to remortgage to a lower rate to avoid your lender’s SVR.

You want to borrow more money

Often people remortgage to raise additional funds for large items or for home improvements. Others choose to remortgage to consolidate debts. However, it is important to highlight the fact that this isn’t always the cheapest way to borrow money. You also need to be aware of the risks of securing debts against your home as your home may be repossessed if you do not keep up with repayments.

You want to lower your monthly repayments

If you’ve a had a change in circumstances and are struggling to meet your monthly repayments, you could remortgage and extend the term to keep your monthly repayments low. You do need to bare in mind that in doing so, you will be paying interest over a longer period so it may work our more expensive in the long term.

What fees are associated with a Remortgage?

Remortgaging has similar fees to a standard mortgage and can include arrangement fees, adviser fees and legal fees.

Preparing for your Remortgage

When it comes to remortgaging, it is wise to start the process early and prepare in plenty of time before your existing deal ends.

Some simple things that you do in preparation include:

• Checking your credit score and ironing out any glitches

• Avoid taking out additional credit such as loans, credit cards and hire purchase agreements

• Stay out of your overdraft

• Minimise spending and keep away from such as gambling

• If you’re self-employed, ensure you use a qualified accountant to submit your tax returns and keep a separate account for your business banking.

How do I remortgage?

Step One

If you are looking to remortgage, the first thing you should do is evaluate your current circumstances. When you remortgage, are you simply wanting to switch to a better rate or are you hoping to pull money out for home improvements, consolidate debts, keep your monthly repayments as low as possible or even pay your mortgage loan off early? All of these factors will help to determine the best course of action for you.

Step Two

Once you have considered your priorities for remortaging, speak to an independent mortgage adviser who can advise you of your options. This will put you in the best possible position to secure the best mortgage product available for your circumstances.

Step Three

Check the value of your property so that you have a solid understanding of how much equity you have in your home. Your current lender will often provide you with a mortgage statement stating their valuation of your property, but looking at comparable properties in your local area or speaking with a local estate agent can also help. Having a solid understanding of the value of your property can help you to understand your options. Your mortgage adviser can also support you with this.

Step Four

Ensure that you are fully aware of the costs involved with remortaging. You may incur costs such as solicitor fees, valuation fees, early repayment charges (if you are coming out of your current fixed rate early) and also potential broker fees. However, all these fees incurred can be offset by the potential savings you are making by switching to the most cost effective product available to you.

Step Five

Once everything is in order, your broker can submit your application. At this point, you should also review all of your current protection insurance policies, especially if your circumstances or your loan amount or term have changed since you took out the initial mortgage.

What are the benefits of using a Mortgage Broker over sticking with my current lender or going direct to my bank?

If you stay with your current lender or go direct to your bank, you will only have access to a small number of mortgage products. Here at The Mortgage Masters, we are completely independent and work for you and not the bank. We have access to over 140 lenders and thousands of mortgage products and therefore a broader range of products to suit your needs. Impartial advice can also help you fully understand your options to support you in making an informed decision on the best way to proceed. We also understand the lender’s criteria and after doing a full affordability assessment and checking your documents, will know which lenders to approach.