How does remortgaging work ?
What To Consider When Remortgaging Your Home
Essentially, a remortgage involves changing your existing mortgage policy. There are a variety of reasons why you might want to remortgage, some of which could include:
- Getting a better deal - Remortgaging to get a better deal and potentially pay less interest each month – this may entail moving to a new provider, or remortgaging with your existing provider. You may have come to the end of a fixed term deal and now find yourself back on your lender's standard variable rate of interest. This may mean you paying more in interest repayments than you need to be. Remortgaging either to a deal with your existing lender or through a new lender could save you a lot of money. if the equity in your house has gone up as you may now be eligible for more favourable terms on your mortgage agreement as lenders will band the rates they offer based on the loan to value of your property. The lower the LTV typically the lower the level of interest you can expect to pay.
- Raising finance - this can provide more cash for paying off debts, buying a new car, or making home improvements. Bear in mind that if you want to remortgage to pay off debt, you will effectively be securing the debt against your home, and should therefore seek professional financial advice before doing so.
- Remortgaging for a more flexible mortgage deal - in order to get the ability to make overpayments or underpayments, take a payment holiday, change to an offset mortgage, or move from a tracker to a fixed rate mortgage deal. You may also wish to reduce the term of your mortgage or extend it depending on your requirements.
With all these reasons for remortgaging your home you should take impartial advice.
Why consider remortgaging?
One of the main reasons to consider remortgaging is to make sure that you are always getting the best mortgage deal possible for your circumstances.
For example, if you have had the same mortgage for several years and have paid of some of the money owed, this means that you will now own a greater proportion of your property and may therefore be able to get a better rate of interest by remortgaging to a deal with a lower loan-to-value ratio (LTV).
Another key time to think about remortgaging may be when your current mortgage deal introductory rate comes to an end. Many mortgages offer an introductory fixed rate or discounted rate for a set period after the mortgage starts, but once this period is over you could find that your mortgage deal is no longer competitive.
Is it always worth remortgaging?
Remortgaging can be a great way to save money for some homeowners, but it may not be the right choice for everyone.
For one thing, there will be certain costs involved such as survey and administration fees – particularly if you are moving to a new mortgage provider – which need to be taken into consideration and balanced against the overall saving that you will make once you remortgage.
Some of the factors that can affect whether remortgaging is financially beneficial for you could include:
- The size of your mortgage – if you only have a small outstanding mortgage amount left to pay off, the amount you save may not be enough to make the process and cost of remortgaging worth your time
- The remaining term of your mortgage – If you want to remortgage and leave a mortgage deal that is still ongoing – for example, you want to leave a five year fixed rate deal after three years – then you are quite likely to be liable for an exit fee of early repayment fee. You will need to weigh up the cost of this against the potential savings you will make by remortgaging at that particular point in time, as opposed to waiting for your current mortgage deal to end and then making the switch.
- Your employment status - If since you took out your original mortgage your employment situation has changed, particularly if you or your partner if tehy are on the mortgage, then depending on how long ago that was this may have a bearing on what type of remortgage deal you can get.
- Credit status - Lenders when considering whether they will lend to you will want to see your credit report. If you have an existing mortgage and wish to remortgage then a credit report will be required. If your credit situation has changed since you took out your initial mortgage this may be a factor in whether you can remortgage. If your credit score has deteriorated due to a bad debt or missed mortgage payment then you may find remortgaging is not in your interests.
Choosing to remortgage your house
Remortgaging is a major financial decision with various benefits and potential drawbacks attached, which means that getting the best remortgage advice should be a really important consideration.
Our Remortgage Service - helping you make the right decision
Fair Mortgages can provide you with a first class remortgage service.
Special features of what we offer include:
- Whole of market service - we cover most UK lenders
- Access to leading market rates
- Access to exclusive remortgage deals not available on high street
- Fast turnaround - call us if you need to move fast!
- We have lenders who will take into account previous defaults and missed payments
- If you are looking to raise finance we will look at all your finance options as well as remortgaging.
To investigate your remortgaging options call our specialist team on 0117 403 4474 or fill in our call back form.
At Fair Mortgages our team of independent, whole of market mortgage experts can discuss your remortgage requirements and help you to find the most suitable remortgage deals for you.