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First of all, what is remortgaging? Well, it’s when someone that already owns a home with a mortgage, decides that they want to take advantage of more favourable terms, such as a lower interest rate or to borrow more money. They would find the best deal and a solicitor will draw down the new mortgage and repay the outstanding one.
The mortgage that you secured when buying your property may not be the best deal after a few years, especially if your home has gone up in value, which reduces your percentage loan. This might enable you to negotiate a lower interest rate with your new or even existing lender.
Alternatively, you might have been on a lower fixed rate that is about to come to an end. When this happens, the interest rate you are charged usually changes to the lender’s Standard Variable Rate (SVR) although sometimes the new rate might be directly linked to other variable datums such as LIBOR or the Bank of England’s Base Lending Rate.
You can remortgage at any time but you may incur penalties if your initial mortgage agreement stipulates fees in certain circumstances. Early repayment may well incur a penalty. There may also be costs such as legal, valuation fees and arrangement fees, (although sometimes lenders pay these for you). So it’s important to allow for these costs when evaluating the benefits of remortgaging.
Many people remortgage so that they can extend their property or otherwise improve it, perhaps by installing a new kitchen. Others want to raise some cash for a child’s education or to give them for the deposit on their new home. It is also possible to remortgage so as to consolidate loans, although in such circumstances you really should talk to your mortgage adviser before doing this. A mortgage may be cheaper on the face of it, but a mortgage over 25 years will likely cost you more than an unsecured loan over say 5 years. The legal ramifications of non-payment also differ between secured and unsecured loans.
It’s important to be aware that all the usual information will be required when remortgaging as when you took your original mortgage. Affordability and stress testing will also be undertaken, so make sure that you plan ahead, perhaps 3 or 4 months before you need to remortgage. This will give you time to get all your information together and search the market for the best deal available. This, of course, is where employing a specialist such as Mortgage Required can pay dividends. We can advise you on the best options and make the process smooth and painless.
Contact our remortgage experts today or book a free online appointment.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There will be no fee for Mortgage Advice. There may be a fee for arranging a mortgage. The precise amount will depend upon your circumstances, but we estimate it to be between £399 and £599.
Mortgage Required Ltd, Finance House, 5 Bath Road, Maidenhead, SL6 4AQ is authorised and regulated by the Financial Conduct Authority reference 573718 at www.fca.org.uk.
The Financial Ombudsman Service is an agency for arbitrating on unresolved complaints between regulated firms and their clients. More detail can be found on their website: www.financial-ombudsman.org.uk
Call: 01628 507477