Remortgaging is a process that involves making changes to your existing mortgage on your current property. This can be done by either switching to a new mortgage lender or adjusting the terms with your current lender, also known as a product transfer. It is important to note that remortgaging pertains only to staying at your current property, with the mortgage remaining secured against it. By remortgaging, homeowners can often save money by securing a better interest rate or changing the payment terms to better suit their financial situation. However, it is important to carefully consider the costs and benefits of remortgaging before proceeding with this option.
One of the primary reasons to remortgage is to save money. By reassessing your mortgage deal, you may be able to secure a lower interest rate, resulting in reduced monthly mortgage payments. Here are some key points to consider when it comes to saving money through remortgaging:
Remortgaging also offers an opportunity to borrow additional money against your property, which can be particularly useful for home improvements or other financial needs. Here are some key points to consider when it comes to borrowing more on your mortgage:
If you need to raise a lump sum to pay off debts or making home improvements, you have the option to leverage the equity in your current property. This may increase your mortgage loan, but if your property's value has risen due to long-term ownership, the loan-to-value ratio may remain unchanged, allowing you to access favourable interest rates.
You may find a different mortgage lender that permits higher overpayments than your current lender, which can save you thousands on your mortgage by reducing the overall interest paid over a shorter borrowing period. The standard is typically overpayments of 10% of your remaining balance per year.
Remortgaging can be advantageous if your property's value has risen because it would lower the LTV (loan-to-value) and potentially result in better interest rates. The same applies if you have been making repayments on the property for several years, as the LTV would decrease since you would no longer require the original loan amount. Understanding how the LTV of your property affects remortgaging is crucial in finding the best deals and saving money in the long run.
When your existing mortgage deal expires, you will be moved onto the lender's standard variable rate, which is usually more costly, so refinancing can assist you in securing improved mortgage interest rates.
When remortgaging, it's crucial to understand the different types of remortgage deals available in the market. From fixed rate remortgages to tracker remortgages, each option offers unique benefits and considerations. In the following sections, we will explore the different types of remortgage deals to help you determine which one is the right choice for you.
A fixed rate remortgage offers stability by providing a fixed interest rate for a set period of time, typically two to five years. Here are some key points to consider when it comes to fixed rate remortgages:
Tracker remortgages, on the other hand, offer variable interest rates that track an external rate, typically the Bank of England base rate. Here are some key points to consider when it comes to tracker remortgages:
Capped rate remortgages combine elements of both fixed rate remortgages and tracker remortgages. Here are some key points to consider when it comes to capped rate remortgages:
Discount remortgages offer lower initial rates, providing a discount for a set period of time. Here are some key points to consider when it comes to discount remortgages:
Offset remortgages allow you to offset your mortgage balance with savings held in a linked savings account, potentially reducing the amount of interest you pay. Here are some key points to consider when it comes to offset remortgages:
Now that we've explored the different types of remortgage deals, it's essential to understand the timing of when to remortgage. The ideal time to remortgage is typically before your current mortgage deal ends, as this allows you to avoid being switched to the lender's standard variable rate. By remortgaging early, you can take advantage of better rates, potentially saving money on your monthly payments. However, it's generally a good idea to start looking for a remortgage around three months before your current mortgage deal ends. This should give you enough time to research the different options available and complete the application process to ensure your remortgage deal begins alongside your previous deal ending.
The ideal time to remortgage is typically the end of your initial deal, which could be a fixed rate, discounted rate, or tracker rate period. Remortgaging at this point enables you to secure a new deal, ensuring you're not automatically switched to your lender's standard variable rate, which can result in higher mortgage payments. Here are some key points to consider when it comes to the ideal time to remortgage:
When deciding to remortgage, it's crucial to consider current market trends and how they may impact your remortgage decisions. Here are some key points to consider when it comes to market trends:
Now that we've covered the different types of remortgage deals, let's explore the process of remortgaging step-by-step. Understanding how to remortgage will help you navigate the application process and find the best remortgage deal for your needs, be it saving money, releasing equity, or borrowing more on your mortgage.
Remortgaging can seem daunting, but with a step-by-step guide, you'll be better equipped to navigate the process. Here are the key steps to remortgage your property:
When applying for a remortgage, it's crucial to understand the application process and navigate it smoothly. Here are some key points to consider when it comes to remortgage applications:
Now that we've explored the application process, let's delve into remortgage eligibility. It's important to assess your eligibility before applying for a remortgage deal to increase your chances of approval and find the best mortgage for your financial circumstances.
Assessing your remortgage eligibility involves evaluating various factors, such as your credit rating and financial circumstances. Here are some key points to consider when it comes to remortgage eligibility:
When it comes to remortgage approvals, several factors come into play. Lenders evaluate various aspects to assess the risk associated with the remortgage. Here are some key points to consider when it comes to factors affecting remortgage approvals:
To make an informed decision, it's crucial to stay informed about current remortgaging rates in the UK. Here are some key points to consider when it comes to current remortgage rates:
Finding the best remortgage deals requires a comprehensive assessment of lenders, rates, and loan terms. Here are some key tips for finding the best remortgage deals:
Up next, let's explore the fees involved in remortgaging. Understanding these fees is crucial to accurately assess the overall cost of remortgaging and avoid any financial surprises.
Remortgaging involves several fees that contribute to the overall cost of the process. Here are some key points to consider when it comes to remortgage fees:
While remortgaging involves fees, there are ways to lower costs and make the process more financially manageable. Here are some key points to consider when it comes to reducing remortgage costs:
While remortgaging offers several advantages, it's important to consider the potential downsides associated with the process. Understanding these risks can help you make an informed decision about whether remortgaging is right for you.
Remortgaging carries certain financial risks that need to be carefully considered. Here are some key points to consider when it comes to risks involved in remortgaging:
Before making the decision to remortgage, it's crucial to evaluate your current financial situation. Consider how remortgaging aligns with your credit rating and credit check, as this can significantly impact your eligibility for new deals. Evaluate if remortgaging provides lower interest rates based on current base rates, and whether it can release equity for home improvements. Understanding the affordability requirements for new deals is essential to determine if remortgaging is the best way forward.
Yes, it is possible to remortgage with a different lender. Switching lenders can potentially help you secure a better mortgage deal. However, you will need to fulfill the new lender's criteria and go through their application process. Keep in mind that there might be fees involved, such as exit fees or arrangement fees, so it is important to carefully review your mortgage documents and understand the costs associated with remortgaging.
Remortgaging can temporarily lower your credit score. Applying for multiple deals in a short period can further hurt it. However, responsible management and timely payments on the new mortgage can improve your credit score in the long run.
When remortgaging, a property valuation is usually required by the lender to assess the current market value. This valuation can also help negotiate better rates and terms. The cost of the valuation is typically borne by the borrower.
Yes, it is possible to remortgage if you are self-employed. However, lenders may require additional documentation to verify your income and affordability. Make sure to have proof of stable income and a good credit history.