Has your current mortgage deal come to an end? Are you looking to lock into another rate, rather than shift onto your lender’s Standard Variable Rate? Or maybe you’re looking to raise more cash from your home?
Then remortgaging could be the answer.
At Bower, our independent financial advisors are on hand to assist you with all of your remortgaging needs, answer any questions you may have and help compare the best remortgage rates and deals from the whole of the market.
What Is A Remortgage?
Remortgaging is the term used for when you change your existing mortgage or take out a new one on a property that you have a loan on already, or own outright. There are two options for remortgaging – transferring to a different deal or product with your current lender or switching to a new provider altogether.
Product Transfer – This entails switching to a different deal with your current provider without borrowing any additional money.
Switching Lender – Once the funds are released the new lender pays them to the former lender via a solicitor and from there the mortgage continues with the new provider.
Reasons To Remortgage
Having a mortgage is a huge financial commitment and for most people their biggest monthly expense or outgoing. It makes sense that just like you might shop around for a better mobile phone plan or electricity provider, comparing other deals on the market to remortgage a house or property could potentially save you thousands each year.
Here are just some of the many reasons why homeowners choose to remortgage;
- End of Fixed Term Deal
Once the term of your fixed-rate period has come to an end, you will usually be put onto your lender’s Standard Variable Rate (SVR), which may not be as competitive as the interest rate you have been paying.
- Better Interest Rate
It might be that a remortgage comparison could reveal some deals with lower intertest rates for the same terms you are currently on, which if you choose to go ahead with could save you money with lower monthly payments.
- Access Some Money
If you and your home have benefitted from recent house price increases then you’re likely to have a lower loan to value than when you first bought it. This means you could increase your mortgage to raise a cash lump sum, rather than borrowing separately (and in some cases more expensively) from other sources.
- Consolidate Debts
Remortgaging can help you to release some of the equity tied up in your property to clear some or all of your debts, such as a bank loans and credit cards, which usually charge much higher rates of interest than your mortgage.
While this is likely to reduce your total monthly payments and make your day-to-day finances more affordable, it may mean you pay more over the long-term.
- More Flexible Deals
If your financial circumstances have changed in recent months or years, then you may now want a mortgage that can accommodate these changes. Perhaps the ability to make higher overpayments is appealing, or maybe you want to make lower monthly repayments on a lower rate or spread over a longer period. Whatever it is a new deal could possibly accommodate what your current plan does not.
There can be a number of good reasons to remortgage your house, but it’s important to consider all the facts, benefits, costs and risks first.
If you don’t know where to start with finding out more about remortgaging your property then our experienced remortgage advisors are on hand. Our dedicated team will work to get to know you, your circumstances and your mortgage needs and provide impartial, honest advice and guidance on the best deal for you.
They also have expert knowledge of which lenders are the best ones to approach on your behalf if you any of the following apply:
- Small loan
Many lenders only accept remortgage applications if the required loan is over £25,000. Fees may also be a problem with very small remortgage loans, as these may outweigh the saving on offer.
- Early Repayment Charges
If you’ve recently taken out a fixed rate mortgage or a discount mortgage then you may find that early repayment charges make it expensive to take your loan elsewhere during this set period. Your Bower mortgage specialist can find out if these charges can outweigh the savings you’d get from switching to the new mortgage.
- Self-employed Status
If you’ve recently changed your status from employee to self-employed, then you may find it more difficult to get a good remortgage deal. But it’s not impossible!
How does remortgaging work?
Remortgaging is the term used to describe when you change your current mortgage deal to a different one, either with your existing lender or switching to someone new. The process itself is usually pretty straightforward, especially if you are remaining with the same lender but switching deals.
If you are switching lender then you will likely need to go through a similar process like when you first got the mortgage and provide up to date information, documents, proof of earnings etc. You may also require a property valuation but in total the whole process should only take 4-8 weeks and if that save you money it could be well worth it.
Ideally you would start looking around 6 months before your existing deal or fixed rate period is going to end in order to leave plenty of time for paperwork and to get everything sorted.
What is the purpose of remortgaging?
Whilst the main reason most people remortgage is to save themselves money, there are also a number of other situations that lead to homeowners remortgaging such as;
- Finding a lower interest rate which reduces the total and monthly mortgage costs.
- To secure a fixed rate that provides the consistency and stability of knowing exactly what has to be paid each month.
- To pay off the mortgage earlier.
- Releasing equity allows homeowners to access some of the cash tied up in their property which they can then use for renovations, personal spending or to invest in other properties.
- If the new deal is secured at a lower rate of interest then remortgaging might reduce the overall monthly credit payments which can help to consolidate debts.
- For those seeking more flexibility it might be that there are better alternatives available for those who want the options of things such as payment holidays or underpayments.
- You might choose to remortgage in order to save money if your current deal has ended, or is ending soon, rather than paying your lender’s standard variable rate or SVR which is likely to be more expensive.
- To borrow more money.
How much does it cost to remortgage?
If you do decide to go ahead and remortgage then it is important to take a look at the conditions of your existing mortgage and make yourself aware of the potential costs or fees that you may have to pay to complete the process such as;
Remortgage advice: It is always recommended that you speak to a professional mortgage advisor before you agree to or make any commitments to change your mortgage. However this is a cost that is worth the investment as the expert guidance and advice can help save you a lot of money by securing you the best deal.
Property valuation: If required you may have to pay for your property to be valued for your new lender.
Remortgage fees: This is an amount paid to the new lender to set up the remortgage.
Admin fees: Not all lenders charge this but sometimes you will have to pay an admin fee for your provider to forward on the title deeds to your solicitor.
Legal fees: The legal work required to remortgage will require fees paid to a solicitor.
Early repayment charges: In cases where homeowners decide to leave their mortgage before the contract period ends, they will often have to pay an early repayment charge which is calculated as a percentage of the current mortgage.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Some buy to let mortgages are not regulated by the Financial Conduct Authority.
Bower Mortgages provides impartial whole of market advice with an award winning customer service experience. There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but a typical fee will be £595 on completion of the mortgage.
Bower Mortgages is a trading style of Bower Retirement Limited and is Authorised and Regulated by the Financial Conduct Authority. Financial Services Register Number: 451607
Speak to one of our dedicated customer specialists or arrange your free, initial no-obligation quote by calling us on freephone 0800 411 8668.