First of all, congratulations on being one of the lucky ones to get on to the property ladder. It’s not always an easy process as some of our clients find out, but once it’s done you can sit back, relax and enjoy your home.
At the end of your fixed term, you’ll probably want to think about remortgaging and although it’s generally considered easier once you’re on the property ladder, it’s not always plain sailing. There’s some common mistakes when remortgaging which are easily avoided and make the process a whole lot easier.
1. Leaving it too long can be costly
We are all busy, and inevitably life gets in the way, so it’s no surprise that most people delay remortgaging. But this will cost you. At the end of your existing product it’s common for the lender to move you to their standard variable rate. This is typically double the rate of a 2 year fixed rate. Delaying the remortgaging process will see your rate increase considerably. If you don’t have the time, or inclination to spend hours seeking the ‘best’ mortgage for you then ask a mortgage advisor (like us!) to help you find the right product for you which can save you money!
2. Only going back to your existing lender
The easiest option is to go back to the lender who gave you the mortgage previously and switch products. This can be a costly mistake… just because the product they offer you is a better rate than the standard variable product you would have been shifted on to, this doesn’t mean it’s the best product in the marketplace for you.
Comparing other lenders and what they have to offer is time consuming but the benefits of a much better mortgage deal is a great incentive to consider switching lenders. If time is a problem, enlist the assistance of a dedicated mortgage advisor (like us!) who can help you be certain you are getting the best deal for your circumstance.
3. Not forward planning
There’s a tendency when remortgaging to fix ourselves in for a longer term because all the hassle of remortgaing again in 2 years’ time makes us feel a bit unwell! Avoid the temptation to do this because a lot can change in a couple of years. Maybe you will want to move home? If you don’t forward plan you may end up paying hefty penalty fees to get out of the mortgage contract because they won’t lend you sufficient monies for the move OR you could end up with 2 product end dates which means you’ll need to review your mortgage twice as often, defeating the object of avoiding hassle!
So when remortgaging try to think as far ahead as possible. If this is your forever home and stability is key, a long-term fixed mortgage could well be the right product for you. However, for a young professional who may need to relocate for work or a couple starting a family needing more space, it’s best to choose a product that is more flexible.
Nobody knows what is round the corner but a little forward planning can make it a whole lot easier and keep your wealth in your pockets as opposed to the banks.
4. Over valuing your home
If you (or an agent) over values your property on a mortgage application and the lenders surveyor disagrees, you may need to choose a product which isn’t as competitive. It is probable that the better deal is with an alternative lender. However because you don’t want the hassle of more paperwork, the chances are you proceed on the product that isn’t as competitive.
Again, a good broker will complete some research for you on the value of your home or property to ensure you secure the best deal for you circumstance. Number One Mortgages offer expert advice and can help you reach your goals. Please contact us.