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My House Has Gone Up In Value: Can I Remortgage?

Remortgaging is commonly done when the value of a home has increased.

You may be able to remortgage to get a better deal with lower interest rates, or you may be able to sell some of the extra value to raise some cash.

In this article, we discuss how to determine your house's value, why remortgaging might be a good idea when your house value increases, and why you might consider working with a broker.

This guide contains the following information:

  • What are the signs that my house's value has increased?

  • Remortgaging when house value has increased: is it a good idea?

  • Remortgaging early: things to consider

  • Remortgaging with a mortgage broker has many benefits

  • Get the best remortgage deal

What are the signs that my house's value has increased?

Your property's current market value is essential before you investigate remortgage deals. Calculating your loan to value (LTV) will be much easier this way. It is crucial to get a property valuation and work out your LTV before remortgaging.

Get an accurate valuation

Ask an estate agent or surveyor who knows the property market well for their opinion. An online valuation tool can estimate the value of your property, but a professional valuation is more accurate. 

As your property value rises, you will have more equity to work with when remortgaging, but you must be realistic so you don't end up with a lender disputing your calculations.

Calculate your loan-to-value 

Following a professional valuation, you can calculate your loan-to-value (LTV) based on the property's value. Lenders will use your LTV to determine what rates they will offer you or how much capital you can release.

You will be able to find a better remortgage deal if your LTV ratio is low.

The loan to value is calculated by dividing your mortgage value by your house's market value. You can calculate your loan to value percentage by multiplying this number by 100.

Calculation of LTV example

You have a balance of £300,000 on your current mortgage statement

There is a value of £450,000 on your house

300,000 divided by 450,000 equals 0.66

66.6% is 0.66 x 100

(rounded up) LTV = 67%

Is it a good idea to remortgage when the house's value has risen?

Remortgaging is an option if the value of your house increases. The lower LTV band may allow you to negotiate better rates with lower monthly payments. To raise money for home improvements or to consolidate debt (among other things), you can take out a new larger mortgage loan. 

Get a cheaper rate by remortgaging

You might be able to negotiate lower mortgage rates if the value of your property has increased since you bought it. A more competitive product may be available from a new lender or your current lender.

Raising capital through a remortgage

Remortgaging to release equity is also an option with a lower LTV.

  • Take out a new mortgage, cover the balance of your old mortgage, and withdraw the extra as cash. Your repayment rates should remain the same if you don't borrow more than your previous loan.

  • You could also take out a larger mortgage loan to release even more cash - but you'll likely pay a higher interest rate.

When you remortgage to release equity, a lender will want to know what you plan to do with the money.

A holiday or a new car are all common uses they will approve, as are home improvements, buying a second home, school fees, helping a dependent get on the property ladder, and school fees.

Remortgaging early: things to consider

  • In case your house value has increased, you might want to consider remortgaging early. Consider the potential costs of exiting your current mortgage before the fixed interest term ends as well as how much you might save by switching to a new remortgage deal.

Early remortgaging costs

  • Remortgaging with your current lender may waive early repayment or exit charges. If you choose a new lender, you'll likely have to pay this fee. Consider the exact figure when making your decision. Are remortgaging's benefits greater than its costs?

  • There may be fees associated with arranging a new mortgage. It is common for lenders to bundle these together in a package deal, but you may also have to pay an arrangement fee, valuation fee, and solicitor fee.

Compare remortgage deals

When remortgaging, it pays to do some research. Staying with your current lender may seem easier, but they won't tell you about other options.

If you want to get a realistic idea of how much money you could save or how much money you could release through remortgaging, you can compare remortgage deals online or use a mortgage broker.

You won't find remortgage deals on the high street if you use an independent mortgage broker. If you are self-employed, earning foreign currency, have complicated income streams, or have a less than perfect credit history, they are also your best option.

Brokers offer many benefits to remortgaging:

Even if the value of your home has increased, remortgaging is not always straightforward. It is possible that some lenders may reject your application if you do not meet their criteria, or their remortgage products may not meet your financial needs.

Remortgage brokers can provide you with professional advice before you commit to a new mortgage deal. Clients can benefit from using a remortgage broker in many ways:

  • Access to the entire market

The majority of tied and multi-tied brokers prefer to work with their limited list of lenders and contacts. It is possible, however, to obtain exclusive remortgage deals through independent brokers that may not be available otherwise.

  • Convenience and speed

A remortgage broker searches the mortgage market for cheaper deals on your behalf, saving you time and energy. To help you decide which mortgage product is right for you, they can give you a shortlist of the best deals available.

  • Guidance and advice from experts

The most viable remortgage options are outlined by all reputable remortgage brokers. As a result, a broker can match you with the best remortgaging plan for your needs. When you use a professional broker as an intermediary, you have a better chance of getting a lender to accept your remortgage application.

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