The mortgage market moves quickly and getting the best deal can be tricky. You will need a solicitor (or conveyancer) and there may also be valuation fees to pay.
Consider using a whole of market mortgage broker who can search the entire market for you. It may save you time and money.
1. Getting Started
Remortgaging is a good way to cut your monthly payments or release equity in your home for home improvements. However, it’s important to do your homework and make sure you can afford the payments.
It’s worth remembering that remortgaging involves fees, whether you apply directly to your lender or go with a mortgage broker. These can include arrangement, valuation and legal fees. They can add up to thousands of pounds, so it’s best not to rush into anything without checking the costs first.
You’ll also need to be aware of any early repayment charges (ERC) that might be applied if you leave your current deal before it ends. These can be as much as 5% of your outstanding mortgage debt. They can increase over time and may even reduce the amount of money you have left to pay when the mortgage ends.
Most lenders will send a letter to you a few months before your mortgage deal ends, asking you to get in touch with them or a broker about your options. They’ll want you to stay with them and are often willing to offer better rates to existing customers than those available to new ones – known as a product transfer.
Alternatively, you can choose a new deal with another mortgage lender, or even your own bank or building society. You can also find mortgage deals from a range of different brokers who can scour the whole market on your behalf and offer a more comprehensive service.
It’s also worth considering whether a remortgage could help you consolidate other debts. You could use the additional borrowing to pay off things like your car loans or credit card balances, potentially saving interest on those debts and freeing up cash in your budget.
If you’re remortgaging to consolidate other debts, the lender will want to know what the money is being used for and may ask you to provide evidence such as invoices from builders or proof that you’ve paid off other debts. This is because if you fail to keep up the repayments on your debt, the mortgage lender has the right to repossess your property.
2. Choosing Your Lender
Choosing your lender when remortgaging is important to ensure you get the best mortgage deal possible and save the most money. The key considerations are the loan rates, associated fees and your personal situation. For example, if you have significant equity in your property or a high credit score (which indicates that you are good with your finances), you could benefit from much lower interest rates and costs.
Ideally, you should contact at least three lenders for quotes and compare loan estimates (officially known as ‘Loan Decision Letters’). Although contacting multiple lenders may cause a temporary hit to your credit score, it will help you find the lender with the most competitive terms. Additionally, each lender will have different underwriting criteria and may offer different products based on your individual circumstances.
When deciding on a lender, consider the length of time it will take to process your application. This will depend on whether you are staying with your current lender or switching to a new one. Staying with your current provider can be quicker, as they already have your mortgage documentation on file and will likely only need to carry out a credit check once. On the other hand, a new lender will need to conduct a full credit check and assess your property’s value which can take up to two months.
It is worth noting that if you remortgage before your initial tie-in period ends and are still within your lender’s lock-in period, you will typically have to pay an early repayment charge (which reduces over time). This fee can eat into any savings you may make by switching providers.
It is also worth noting that any additional borrowing will add to your overall debt and could potentially affect your ability to borrow in the future. This is why it is important to only remortgage if you are sure that you can afford the additional repayments. To ensure this, you should always carefully check your budget before committing to a new mortgage. Lastly, it is worth noting that a remortgage will generally require you to provide proof of income, including your partner’s.
3. Getting Started with a Broker
A mortgage broker is an independent financial advisor who can find you a suitable remortgage deal based on your personal circumstances and the mortgage criteria set by a lender. They will search the whole market for remortgages to match your needs, which can save you a lot of time and effort. They will charge a fee for their service, but this can be worth it if they are able to land you a better deal than you would have found on your own.
The best remortgage brokers have access to the entire market, including niche lenders who are not listed on price comparison websites and who aren’t available to direct applicants. These brokers can also negotiate deals that are not on the public market, saving you a lot of money in the process. They will also use their expert knowledge of the market to advise you on the benefits and drawbacks of different products.
Remortgaging is a big decision and it’s essential that you take your time to consider whether it’s the right move for you. There are many reasons why you may want to remortgage, from improving your rates to freeing up equity in your home to consolidate debts. It can be a tricky decision and there are lots of things to think about, so it’s important to consult a professional.
When choosing a mortgage broker, you should ask about their qualifications and experience. Many brokers have previous work experience in the mortgage industry and are familiar with the ins and outs of the market. You should also compare fees charged by different brokers to ensure that you are paying the lowest rate possible.
Before applying, you should make sure that your mortgage terms are still valid and that you can afford the repayments. You will likely need to provide evidence of your income, which can be a lengthy and time-consuming process. If you are self-employed or your job has changed since you got your initial mortgage, this may be even more difficult.
You should also check if there are any exit charges or early repayment charges (ERCs) on your current mortgage. These can be costly if you switch lenders.
Unless you have secured other debts against your home (such as a payday loan) it should be easy for mortgage lenders to give you a new mortgage. However, how much you can borrow will depend on the amount of equity in your property and whether mortgage lenders think that you can afford the repayments. Mortgage lenders will always take a close look at your credit rating to ensure that you are able to make the repayments and not put your home in jeopardy.
Many people decide to remortgage when their current mortgage deal comes to an end. You can often save thousands of pounds by switching to a better rate. You should start looking into your remortgage options well ahead of time so that you can secure the mortgage before your current deal ends.
Mortgage lenders will want to know that you can not only afford the repayments now but in the future too should interest rates rise. It’s a good idea to speak to a mortgage broker as they will be able to search the market for deals that may not be available through your bank or building society.
When you find a mortgage deal that you like you will need to complete a remortgage application form. The process will usually involve a lender’s valuation of your property and it’s worth putting in a request to have this done as early as possible to avoid delays. Lenders may charge booking fees and there will likely also be legal fees to pay too.
Your credit score will be checked so it’s a good idea to keep other applications to a minimum in the run up to applying for your remortgage. Too many applications can damage your credit score and you may be seen as irresponsible. It’s best to apply through a specialist broker as they will be able to search for the best deal without affecting your credit score.
Once the remortgage has been approved you will be sent a formal mortgage offer in writing. You will need to pay any legal fees required and you might have to pay a product transfer fee to your existing lender.