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Remortgaging – What You Need To Know
Remortgaging is a process that we help thousands of homeowners complete each year. It essentially means ending your current deal before the end of the mortgage term before taking on a new mortgage.
Whether you were a first time buyer, already own your property outright, or have several years remaining on your current deal before you pay off your mortgage, it could work wonders for you too.
Why Should I Remortgage?
We help people remortgage their properties for a number of reasons. The most common reasons are:
- You want to find a better interest rate after the initial phase of your fixed-rate or discounted mortgage is about to end so you can save money.
- An increase in your property value means you’re now able to get a better loan-to-value (LTV) rate to unlock a lower interest fee.
- You need to raise money and relinquish some of the assets to free up for other projects. This could include home improvements.
Under the right circumstances, a remortgage can boost your short and long-term finances. The key, however, is to find a deal that works for you.
Getting Ready To Remortgage
Before you rush in, you must put the right steps in place to get the best deal. Here’s what you should do.
- Gain access to a free credit check tool and make the changes needed to boost your credit score before you apply to remortgage.
- Use an online calculator to discover how much you can borrow. This will help you determine whether a new deal is viable.
- Calculate your home’s current value and how much of it you owe. This will tell you what the Loan to Value (LTV) is so you can plot your next steps.
Self-employed applicants will need to prepare their business accounts and tax accounts as lenders need you to prove your long-term earnings.
Above all else, starting your preparations early will allow you to browse the market for the best lenders and products.
What Remortgage Should You Choose?
Remortgaging is a slightly more complex process than with a standard mortgage. After all, you have to end the current deal before starting the new one. However, the same type of mortgage products are available for remortgages, such as;
- Fixed rate mortgages,
- Standard variable rate SVR mortgages
- Tracker mortgages
- Repayment mortgages
- Interest only mortgages
No two applicants are the same. The only way to find the right one for you is to run a full analysis of your financial situation. From there, you’ll have to weigh up the pros and cons of all eligible products.
What Fees Will There Be?
As is the case with any mortgage, remortgages are hit with various fees. Before applying for a remortgage deal, you must familiarise yourself with the following:
- Arrangement Fees – They can be a fixed-rate or calculated as a percentage of the new mortgage value. They can be paid as one sum or added to the mortgage total and paid off monthly.
- Booking Fees – A fee of usually between £100 and £200. However, not all lenders will charge this.
- Legal Fees – A solicitor will be needed to complete and execute the contracts. Some lenders may provide an in-house legal advisor.
- Valuation Fees – When moving to a new lender, you will need a property valuation, which can cost up to £1,500. This is much like when you had it valued for the original mortgage.
Other fees that may be encountered include an early repayment charge (1-5%) on your current mortgage. Also, an administrative exit fee to close the existing mortgage account will be required.
How Do I Get The Best Remortgage Deal?
The best remortgage product for you may be completely different from a friend’s. This is because there are many variables, ranging from LTV to your salary. To find the best remortgage deal, you must;
- Build an exit strategy for your current mortgage and confirm all exit fees that would be incurred.
- Consider whether the current mortgage lender has a better deal without incurring the fees of switching lenders.
- Compare all lenders. Check that the remortgage will free up enough capital.
- Confirm that the new repayment terms and monthly payments are agreeable. This means the monthly cost and duration.
- If possible, try to lower your LTV band to get a better rate.
There are a lot of issues to consider, but remortgaging can save thousands in the long run. If it all sounds a little daunting, the good news is that you’re not alone.
How Can A Mortgage Broker Help?
Our mortgage broker services are ideal for anyone hoping to open a remortgage. Our experience and expertise can support you in several ways, such as;
- Check your credentials for remortgaging. This covers everything from the products you may be offered to any early exit fees on your current deal.
- Help you prepare to ensure that the remortgage deal is quick and convenient. Crucially, we ensure that all developments are transparent.
- We use our impartial insight to ensure that you gain access to the most suitable remortgage deal. We can also help you consider alternative options.
If you are planning to remortgage, only the best deal will do. Above all else, professional support can deliver peace of mind.
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
Why Spot On Mortgages to this?
Other types of mortgages are available such as Variable, Cashback, Capped, Collared & LIBOR.