Remortgaging your home or property

Just as you might shop around for the best broadband deals and the cheapest energy rates, the same applies for your mortgage. You can shop around to see if there is an opportunity to save money.

If you do find a cheaper mortgage rate, you could end up switching onto the new mortgage deal, and this is what’s known as remortgaging.

Your current fixed deal is up for renewal

If you took out a fixed rate mortgage where you pay the same amount every month and the interest rate remains the same, once the initial term has ended (it would have been 2,3,5 years), you’ll fall onto a standard variable rate (SVR) where you could end up paying a higher interest rate than you were previously. This is usually the time when you might look to remortgage in order to switch to a better mortgage deal.

You want to move from interest-only to repayment

Perhaps you’re on an interest only mortgage and you want to move to a repayment mortgage. Generally speaking, your lender should be able to change this for you without the need to remortgage but if they can’t offer you the deal you want, then you might consider a full remortgage.

Want to be on a better rate?

You might want to move to a mortgage that has a better interest rate but sometimes the lender requires you to pay an early repayment charge before you can switch. It’s important to weigh up the price of the early repayment charge (sometimes referred to as exit fee or admin fee) against the costs you’ll be saving with the lower interest rate.

You want to make overpayments

You might have a higher paying job now than you did when you took out your mortgage, meaning you now have more disposable income and can afford to make overpayments, but perhaps your current lender doesn’t allow you to. Therefore, you might want to look at changing over to a new mortgage with a lender who will allow you to make overpayments.

Borrowing more money

Moving home can cause a lot of upheaval and can be very expensive by the time you’ve paid for all the fees and moving costs. Choosing to stay put and make home improvements can be a cost-effective way of getting the house you’d like.

In order to cover the cost of the improvements, whether for an extension, loft conversion etc., you might consider re-mortgaging. Don’t forget to do your research first though and weigh up the pros and cons of paying the early repayment charge, as you might find that a home loan is overall better for you than re-mortgaging.

Just be aware that your lender will want to know what you intend to use the money for and may ask to see builder’s quotes etc. as evidence.

No. Although remortgaging can be useful to help free up money, reduce your monthly bills or help you borrow more money, not everyone needs to remortgage. If we don’t cover any of your questions there, feel free to get in touch with us and our experts will be happy to help.

You may well have heard of remortgaging but never fully understood what it means. In layman’s terms, remortgaging is when you look to move from one mortgage deal to another, either sticking with the same lender or moving to a new one.

A mortgage is likely to be your largest financial commitment lasting you many years, but you don’t necessarily have to stay on the same mortgage as the one you initially took out, as your personal circumstances may, and probably will, change over the years, giving you a reason to remortgage.

Just as you did when you took out your first mortgage, it’s important to reevaluate your finances every now and then, and consider all your options in order to know you’ve got a mortgage that is right for you at that moment in time.

This depends on the lender, and why you are choosing to remortgage. Sometimes the lender will require you pay an early repayment charge before you switch, which does add to the overall cost of remortgaging. However, this may be offset over time by the lower interest rate you find with a different lender.

For the most part, homeowners tend to remortgage to take advantage of their improved rate as they near the end of a fixed term mortgage deal. This better loan-to-value allows you to make reduced payments over the new mortgage term, and can have a positive impact on your monthly budget.

There are various different reasons why people choose to remortgage. Some of these might include :

• Your current fixed deal is up for renewal
• You want to move from interest-only to repayment
• You want to be on a better rate than you are currently on
• You want to be able to make overpayments
• You want to borrow more money

For instance, you may have initially taken out a fixed rate mortgage whereby you pay the same amount every month and the interest rate stays the same. However, once this initial period has ended (it could have been a 2,3,5 year fixed) you will fall onto a standard variable rate (SVR) where you could end up paying a higher interest rate than you were previously. This is usually the time when many homeowners look to remortgage in order to switch to a better mortgage deal.

Before you decide to go ahead and switch onto a new mortgage deal, it’s worth weighing up a few things first:

• Check if your new lender is offering a fee-free mortgage (many lenders will write to you near the end of your current mortgage term and offer you a new deal to switch to), or if there is a product fee involved as this could counteract the savings you could have made by remortgaging.
• There may be an early repayment charge on your current mortgage that you have to pay off before you can switch to a new deal. Again, this could outweigh the benefits of switching.
• The lower your loan-to-value (LTV), the more mortgage deals that may be available to you. You can work out your LTV by dividing your outstanding mortgage balance by your property’s current value.
• Make sure you are mortgage ready. Just because you have a mortgage already, doesn’t mean the same checks won’t be carried out when you apply for another one. Make sure your credit score is healthy as the lender will still perform the same affordability checks.