So, you are looking into remortgaging?
Simply put, a remortgage is when you change mortgages. You can do this by finding a brand-new mortgage deal with another lender. Or you can switch from one deal to another with your existing lender (product transfer). Remortgaging can be the answer if you have thought about it carefully and know the facts.
The process is basically the same as when you applied for your first mortgage. Using the broker that you used for your first purchase can be beneficial as you have already built a relationship with them. They can give you comparisons against your current mortgage with the deals available on the market, including your current lender.
When is the best time to remortgage?
You can remortgage at any time but there is no point of doing it just for the sake of it. If you are looking to improve your financial situation then this would be a good time to think about it. Like anything everyone’ s situation is very different.
If one of the following applies to you then it could be a good indicator to look at remortgaging:
- Your fixed-rate mortgage is coming to the end of its term
- You have built up equity in your home that will change your circumstances
- Interest rates are lower than they were when you originally took it out
- When you are trying to overpay, and your lender isn’t playing ball
Your current deal is ending, is it time to be remortgaging?
Because some of the best mortgage deals are short this is probably number one reason people remortgage. Fixed rate and tracker mortgages usually last 2 to 5 years. When this deal comes to an end, you will be automatically moved to the lenders basic deal. This is called a standard variable rate mortgage which can come with a higher interest rate.
Remember that when looking to remortgage due to your current deal ending be prepared. It is best to start the ball rolling 3-4 months in advanced. This gives you/your broker time to look at the best options for your circumstances.
You have equity you want to use in your home
Always a good position to be in. If your house is worth more now than when you brought it there will be equity you can use. Most people use this avenue for home improvements, a new car or to clear other debts. Whatever the reason for taking this course of action the lender will more than likely want to know your reasoning.
Interest rates are now lower
If your mortgage was taken out when the Bank of England’s base rate of interest was high, you could be saving money by remortgaging when the rates are lower. These mortgages are usually ones that were taken out a while ago where the rates were higher.
Remember, when you remortgaging before the end of your current deal, you’re likely to have to pay an early repayment charge (ERC). It’s important to weigh up whether the saving from remortgaging outweighs this one-time cost.
You want to overpay and remortgaging could be the answer
Coming into some extra money can make you want to spend it wisely. Could have a been a pay rise or inheritance that you could use to overpay your mortgage.
Some lenders are ok with you overpaying your mortgage but there maybe early repayment charges as this means they make less money from interest overall.
If you are interested in comparing remortgage deals then please get in touch with our friendly mortgage advisors here – 08081 551 807.