How can you remortgage?
If you want to know why you might consider remortgaging, when you should remortgage, the cost of remortgaging and the steps on how to do it, then read on.
What does it mean to remortgage?
Remortgaging means that you are shifting from one mortgage to another but on the same home, you already own. This can be in the form of a new deal with your existing mortgage lender, or you may want to move to another mortgage with a new mortgage lender.
A mortgage is a substantial financial commitment, and there are a lot of options to choose from. In this article, we will discuss what you need to be thinking about when you want to remortgage.
Why might you want to remortgage?
- Standard variable rates – When your mortgage term is nearing its end, you will be put on the mortgage lender’s standard variable rate. The interest rates will get a lot higher, and you must avoid it at all costs.
- You can borrow more – remortgaging allows you to borrow more against your current home.
- Reduce monthly repayments – If you find a cheaper deal which is more affordable, you can switch the better deal without having to borrow more. However, you will have to pay fees such as an exit fee or early repayment fee.
- Change in Bank of England base rate – Suppose you are on a variable rate mortgage, then you can consider shopping around for a better deal.
- Increase in property value – If your property has increased in value may mean that you qualify for a cheaper mortgage.
- Fix your payments – If you are on a standard variable rate mortgage and want to switch to a fixed rate deal so that you have some certainty.
When should you remortgage?
- Every few years – you can remortgage every few years to ensure that you have the best deal.
- Three months before your fixed deal ends – three months is plenty of time to shop around and get a better mortgage.
- If you have repaid a significant debt – If you have repaid a substantial part of the debt, you should switch to a different mortgage which can reduce the interest you will be paying each month by taking advantage of the competitive deals.
- After expiry of current deal – If your current deal has expired, you may still be better off paying by paying the penalty to switch.
What are the steps of remortgaging?
- Get out your paperwork – Figure out which kind of mortgage you are on, the current interest rates, long you have left to repay the debt, and how much you are paying monthly.
- Find a better deal – You can either do this yourself, or you can hire a mortgage broker.
- Speak to your mortgage lender – once you have found a better deal, you should speak to your mortgage lender if he can match the deal. Your mortgage broker just might offer something which is not very widely advertised by them.
- Mortgage application - You need then need to make fill out your mortgage application and apply for the mortgage.
- Conveyancing solicitor – If you are remortgaging with your current lender, it will not require any additional legal work. Otherwise, you will need a solicitor or a licensed conveyancer to help you out with the process.
How long does it take to remortgage?
It can take up to a month for you to get a mortgage offer after you apply. However, there is no guarantee that it will take a month.
How much will it cost to remortgage?
- Early repayment charges – early repayment charges are generally around 3% to 5% but will reduce each year of your fixed-rate mortgage.
- Exist fees – usually, lenders charge an exit fee. It is for closing your mortgage account.
- Arrangement fees – Some lender will want to charge you for the cost of arranging the mortgage.
- Legal fees – Usually, the lender handles the majority of the legal fees involved in remortgaging.However, if you are required to pay some amount towards legal fees, you cannot add it to your new mortgage and will have to be paid upfront.
- Valuation fees – When you remortgage, your house will be valued by a surveyor. You will have to cover the cost of valuation of your home.
Please note that the information provided on this page:
- Does not provide a complete or authoritative statement of the law;
- Does not constitute legal advice by Net Lawman;
- Does not create a contractual relationship;
- Does not form part of any other advice, whether paid or free.
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