A remortgage is the process of moving a mortgage from one lender to the next. Our customers remortgage for lots of different reasons. You can raise money for home improvements, pay off debt or just reduce your monthly payments. If you have been with your mortgage lender for several years, you should consider a remortgage as it could save you thousands.
Reasons to remortgage
There are lots of different reasons to remortgage, but the main reason is to put you in a better financial position whether it be lower monthly payments or using some of the equity in your home to improve your lifestyle.
Worried about interest rates rising
If your current mortgage is on a variable rate or tracker and you are worried that interest rates could increase, then considering remortgaging onto a fixed rate mortgage could save you money and provide a fixed monthly payment for a set period.
Borrow for home improvements
If you are raising money for home improvements, it’s a great time to review your whole mortgage and ensure you have the best terms available.
You want to consolidate loans or credit cards
Borrowing extra money against your home as a debt consolidation mortgage can reduce your monthly outgoings. You should also be aware of the downsides as you could be extending the term of the original debt and end up paying more interest.
You want to overpay on your mortgage
If your lender has penalties for making over payments and you are looking to reduce your mortgage loan, then a remortgage may be an alternative. The costs involved in changing lender should also be weighed up against those penalties.
Your property has increased in value
If your home has increased in value since you purchased it, you may be in a different loan to value bracket. Lower loan to value brackets or LTV’s means you are considered a lower risk by the lender and they may offer you a lower rate of interest.
You are on a Standard Variable rate
If your mortgage is on a standard variable rate, then you could reduce your monthly payments by taking a fixed or tracker rate with a new lender. There may be tie-ins and penalties to consider on the new loan, but they tend to go hand in hand with special low-cost interest rates.
What are the set-up costs?
When you switch lenders there are usually set up fees to pay. Some mortgage lenders have special offers where they will cover the cost of some of these fees.
Valuation Fee – This is a fee to check the property is suitable security for the lender.
Arrangement Fee – The lender may charge a fee to set up the mortgage. This can be paid on completion or added to the loan.
Solicitors Fees – You will need a solicitor to change the mortgage over and handle the money. The new lender will sometimes pay the basic fee’s but there may be other fees to pay.
What is a product transfer?
If your current lender has a new rate to offer you, switching to this without changing mortgage provider could be the best option. The fees to switch are usually lower and the process may be faster.
Reasons not to remortgage
There can be reasons not to remortgage and it isn’t for everyone. In some cases, it may not be the right time or in other cases you may not be eligible.
The value of your property has fallen
If the value of your property has fallen and your mortgage has fallen into a lower loan to value or LTV band the new rates being offered may not be as good at your current interest rate.
You have missed payments
If you have missed payments on your mortgage or other credit commitments, you may not pass the credit check for the new lender. Under these circumstances you may have to wait several months before you re-apply.
You have an early redemption penalty
If you have a penalty with your current lender for paying your mortgage off or changing lender then this should be carefully compared against any benefits of a remortgage with a new lender.
We love helping our customers
If you remortgage to maintain a low interest rate on your mortgage you could save you thousands over the life of your loan.
Sign up to our magical remortgage tracker and find out the perfect time to start the process.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP THE REPAYMENTS ON YOUR MORTGAGE.