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Remortgaging – Choosing the right option for you

Remortgaging can often feel daunting, even when it’s a process you have completed before.

We are here to guide you through your remortgage to help you find the right deal for your needs.

Now, let’s address a few key questions that often arise:

What is remortgaging?

Remortgaging is simply the process of switching your mortgage lender. Typically, this happens when your fixed-rate mortgage term ends, and you want to search the market to see if a new fixed-rate deal is available to provide you with mortgage payment certainty. Sometimes, your existing lender may have a new fixed-rate mortgage deal that you can transfer to; this is known as a product transfer and in other cases another lender may have a better deal available to you, so you settle your old mortgage with a new one provided by a new lender.

What remortgage options are available?

Your remortgage options depend on your individual circumstances. Typically, a conversation with your existing lender or a mortgage broker is the first step you should take in exploring your options. The selection of products suitable for you depends on factors such as your income, expenditures, credit score, remaining mortgage balance, and the current value of your property.

It’s essential to understand that when switching from one lender to another, the new lender must reassess your affordability, even if you’re not increasing your loan amount. This is done to ensure you meet their affordability requirements and lending criteria.

Navigating this can be complicated, which is where a mortgage broker can offer invaluable assistance. We pose relevant questions to pinpoint suitable lenders and products for you while striving to secure a competitive deal.

When is it a good time to remortgage?

There are various reasons for remortgaging, with two of the most common being:

  1. Transitioning away from your current mortgage deal, often when it reaches its end.

  2. Accessing funds for home improvements or consolidating debts.

Determining whether it’s an opportune time to remortgage depends on your specific objectives. For instance, if you intend to fund home improvements, we can help you assess the pros and cons of leaving your current mortgage deal. In some cases, staying with your existing bank and borrowing additional funds from them might be the better option.

Numerous variables come into play, especially when your current deal is concluding.

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When is remortgaging not a good idea?

Remortgaging may not always be the most suitable choice, and an advisor can guide you in making this decision. A few scenarios where remortgaging might not be in your best interest include:

  1. Being locked into a fixed-rate deal with a substantial early repayment charge.

  2. A significant drop in the value of your property resulting in a mortgage balance close to its current value.

  3. Having a relatively small mortgage, where even with a lower rate, the monthly payment difference may not justify the associated fees.

  4. Significant changes in your circumstances, such as missed mortgage payments or alterations in your credit rating, which might limit your options.

Ultimately, we ask the right questions to assess your situation and then provide a recommendation. In some instances, sticking with your current lender, even at a higher rate, maybe the most suitable course of action.

Why remortgage at the end of a fixed rate deal?

Once your fixed-rate period ends, you’ll transition to your lender’s standard variable rate, resulting in higher payments than necessary.

Many of us routinely assess our car insurance annually in pursuit of better deals. However, when it comes to mortgages, we’re dealing with a considerably larger scale: it’s your most substantial and costliest commitment. Therefore, it becomes paramount to evaluate your choices as your fixed-rate term nears its end. Your best course of action may involve either remaining with your current lender or remortgageing with a new one.

The primary reason for considering remortgaging is to avoid overpaying unnecessarily. Remaining on a variable rate tends to be risky, as the rate can fluctuate, leading to fluctuations in your monthly mortgage payments—a situation that many prefer to avoid. Typically, most people prefer the stability of consistent monthly payments over a set time period.

Once again, the key lies in seeking professional advice to understand your options comprehensively.

How do I improve my chances of getting a good remortgage?

One crucial step is ensuring you consistently make your mortgage and other financial payments on time, avoiding any missed or late payments. Setting up direct debits to ensure payments are made on the appropriate dates is a must.

Additionally, initiate discussions regarding remortgaging as early as possible, usually around six months before your current deal concludes. Ensure you have all the necessary documents ready for your remortgage application and submit them promptly to your bank or broker.

While some factors may be beyond your control, focusing on what you can influence will improve your prospects for a successful remortgage.

What fees are associated with a remortgage?

Fees often come to mind when considering remortgaging, but, generally speaking, they may not be as intimidating as you might think. Remortgaging typically involves some legal work because you’re transitioning from one lender to another, effectively changing the legal charge on the property.

However, the legal work involved is usually minimal, and the good news is that many banks offer cashback to cover the majority of the legal costs or provide a ‘free legal’ service, effectively covering these expenses.

Additionally, most remortgages include a free property valuation, although not all. Around 90% of the remortgage market does not charge for valuations on your own property. Depending on the specific product you select, there may be associated product fees with the bank, which can typically be added to the loan if necessary. These fees are often charged in exchange for the benefits of a fixed rate or other specific product features.

The remortgage market is highly competitive, and banks frequently cover the majority of fees themselves.

What are your final thoughts on remortgaging?

It’s crucial to bear in mind that consulting with a mortgage broker grants you access to a broader range of options in the market. We handle all the legwork and provide recommendations, outlining the pros and cons of each option to empower you to make an informed decision.

Given that your mortgage is one of the most significant and long-term commitments you’ll undertake, regularly reviewing your mortgage options is vital. It ensures that you don’t pay more than necessary and helps mitigate the risks associated with variable interest rates. We’re here to provide guidance and assist you in making well-informed choices based on your unique circumstances.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS