Remortgage
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Remortgage
Kevin Dunks gives us a recap on remortgaging.
What is a remortgage and how does the process of remortgaging work in the UK?
A remortgage is where you move your current mortgage to a new lender. You can also do a product transfer, where you switch products with your existing lender.
The process starts with a 15 to 30 minute chat with an advisor about your objectives and circumstances. The advisor then goes off and then researches options to match those objectives. A good broker will always include your current lender in the mix to compare against what’s available elsewhere. The process is pretty easy with the right help.
How long does it take to remortgage? How often can I remortgage my property?
It typically takes five or six weeks to go through the full remortgage process. You can remortgage as often as you like, but you will want to consider the costs, including any early repayment charges that apply to your current product.
Remortgaging should be chatted through in line with your objectives about four months before your current product is due to end. It is a good idea to start a few months ahead partly to take the pressure off, but more importantly to secure a good rate.
Here at Number One Mortgages, we have software that alerts us if rates for equivalent products improve. If rates reduce, we can move you onto a new deal – but we can never have yesterday’s rates. So it makes sense to instigate things four or five months out.
What are the main reasons why people choose to remortgage? What factors should I consider when deciding whether to remortgage?
The most common reason for remortgaging is simply to get onto the right deal. Then, your hard-earned cash stays within your family for the nicer things in life. People also remortgage for home improvements, consolidating debts and reducing monthly expenditure, or possibly to reduce the mortgage term and become mortgage free sooner.
People may be looking to raise money because they are parting company with an ex, or for business purposes. The list goes on, really. If it’s legal, the chances are you’ll be able to remortgage for it.
What happens to my existing mortgage when I remortgage? What happens if I don’t remortgage after my deal expires?
If you don’t do anything, you’d move on to the lender’s standard variable rate which is often 3%, 4% or even 5% higher than the deals in the market at the time. We know it’s a bit of a pain to do a remortgage and review your paperwork, but it’s a no-brainer.
Generally speaking, this is the largest direct debit coming out of your bank account. If you’re going to review anything, it should be the mortgage. You should do that approximately four months out from the product ending.
Can I remortgage if I have bad credit?
It does depend on how bad the credit situation is, but we often help clients with historic credit issues. To start with, we can get a copy of your credit profile to see what we’re working with.
Having traded as mortgage advisors for over 20 years, we’ve got vast experience on what high street lenders will accept – this is typically where the most favourable deals are. We also work with some less well-known lenders that accept historic bad credit. So if you’ve got a CCJ, default or a missed payment, we can help work out what you can achieve.
Worst case scenario, we can put a plan in place to remortgage in the future. So it’s always worth reaching out if you’ve got a little bit of bad credit.
Will I have to pay any fees or penalties when remortgaging?
Not necessarily, but it’s always worth having a broker check over the terms of your current mortgage product. If any fees do apply on a new remortgage, these will be clearly highlighted to you.
A good broker will consider all fees and compare those against switching products with your current lender to get you the right deal. If fees do apply, they can often be added to the mortgage loan, so you don’t have to find the money up front. But please be aware that you do pay interest in any fees added to the mortgage.
How much could I potentially save by remortgaging?
You could potentially save thousands and, over the course of a mortgage, tens of thousands. Remortgaging doesn’t seem like a bundle of fun, but this is a large direct debit from your bank account. If there’s only one service you review, it should definitely be the mortgage.
Unless you’re looking to pay the mortgage off in full, it’s always going to be worth exploring.
Sticking with your current lender may be the right option, but it could also cost you thousands more than shopping round for the right deal. If the right deal is with your current lender, we’d always recommend sticking with them. But it’s worth exploring to make sure that is the case.
SPEAK TO AN EXPERT
We will save you time by researching the market, checking that you meet the lenders criteria to find the best mortgage for your circumstance.
What documentation will I need to provide when remortgaging?
I’ll keep this answer pretty short. Typically speaking, we need pay slips if you’re employed, or if you’re self-employed we will need your tax documents and accounts. Bank statements are often required too.
Will I need a new valuation or survey when remortgaging?
Probably not a physical valuation, where you need to provide access – but you might want one. For example, if you’ve made home improvements or you bought for a good price at the time of purchase, you may want to have the home valued.
Having a higher valuation can facilitate better deals and help you release funds for your objectives. If you want or need a valuation, choose a lender that will come to your home and provide you with an up to date and fair price. Valuations are normally free.
Is it harder to remortgage if I’m self-employed or a contractor?
Not necessarily, but it can be. The self-employed and contractors do tend to benefit from good advice and independent advice even more than employed people. The knowledge of lending criteria held by a good broker can be essential to achieving your objectives.
You can also secure a rate with your current lender, without the need to evidence your current income – which keeps things super simple. It’s always a good idea to have a 15 to 30 minute chat with an expert advisor to get the advice you need.
What happens if my property value has decreased since I initially obtained my mortgage?
It does depend how much equity and deposit you have in the property. It can limit your It does depend how much equity and deposit you have in the property. It can limit your options and possibly mean you’ll pay a slightly higher interest rate.
Nearly always, however, there will be better options than moving on to the standard variable rate, so just don’t do nothing. If you have made home improvements, you’ll want to have the property valued in its current condition, to get a fair valuation and the right deal for yourself.
If you believe the property has decreased in value since buying it, I’d recommend you chat over your objectives with an advisor for 15 to 30 minutes to work out the most appropriate thing to do.
What are the advantages and disadvantages of fixed rate versus variable rate remortgages?
Most variable products track the Bank of England base rate, with a modest margin. The advantage is that you’re tracking the market, so pricing is fairer. If rates drop, your monthly payments will drop accordingly.
On the flip side, however, if rates go up, your monthly payments will be going up. One of the big advantages that comes with many Bank of England tracker rates is that they have no early repayment penalties, or very low ones.
This provides greater flexibility if you’re considering to move in the foreseeable future, and gives you the option to switch onto a fixed rate at any time.
Fixed rates are by far the most popular choice because most of us want to know what we’re paying on a large direct debit each month. It provides some security. However, they nearly all come with early repayment penalties for the lifetime of the product. Those penalties aren’t small, and should ideally be avoided if you’re looking to move or repay the mortgage in the foreseeable future.
If rates go up, though, you’re fixed and you won’t see your monthly payments increase. But if rates drop, you’re not going to see any reduction in your payment until you’ve come to the end of the product. What is most suitable for you will depend on market predictions and your needs and objectives.
Can I remortgage if I’m nearing retirement age?
Yes, of course. This is a time where people are motivated to get rid of debt and live life mortgage free. With good advice in finding the right deal and discussing your budgets, you can explore knocking years off your mortgage or finding a product that allows you to overpay without penalties.
It may be that you are expecting a lump sum from your pension and you want to use this to repay your mortgage. If you believe it’s impossible to pay the mortgage off before retirement, you would no doubt want to keep monthly payments down. All of these options can be explored.
How can a mortgage broker help with a remortgage?
As well as taking away the strain and helping with the paperwork, a broker gives you confidence that you’re getting the right deal for your circumstance and objectives, and heavily increases your chances of your goals.
Remember, we recommend chatting over your objectives on a remortgage around four months out before your current deal ends. We can then secure you a rate. We can go onto improved rates should they become available – we have software that alerts us to that.
We’re here to help. Please reach out and we can chat over your plans and circumstances at no cost – and then work out what you want to achieve.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
4 simple steps to get the best mortgage deal
Step 1
Step 2
Let your personal mortgage adviser save you time and money by researching the market (including your current lender) to find the best product for you.
Step 3
Once you are happy with the advice, your mortgage adviser will apply online for the best mortgage product for you.
Step 4
Your dedicated relationship manager will correspond with the lender until your new mortgage product begins. We will also remind you when the new deal is ending, ensuring you always have the best deal for your circumstance!
Start saving your time and money, get independent advice today!
What you need to know…
There are many reasons to consider your remortgage options however, the main reason is that you could be spending £1,000’s extra each year in additional interest. Other reasons could be that you would like to raise capital to build an extension, for home improvements or to consolidate some debt. It is best to chat over your existing mortgage and objectives with an expert independent mortgage broker to give you the advice you require to make an informed decision.
You can remortgage at any time, however you want to choose a time when there is a positive benefit to you moving mortgages. This may be when:
- You’ve come or coming to the end of your current mortgage product
- You want to raise monies, for example to complete home renovations
- You are on a variable rate and worried about rates rising
- Rates are lower than you are currently paying
You can get advice as to when is the best time for you to change your mortgage by chatting with an independent mortgage adviser.
Your monthly payments will vary depending to your chosen mortgage term, choice of mortgage product, how much deposit you have and repayment type. It is best to chat with a personal independent adviser to find out exactly what interest rate and term you can secure to give an accurate monthly payment.
Depending on the amount of equity in your property and the amount you can potentially borrow, some lenders will allow you to borrow up to 90% of your property value, subject to surveyor’s comments, and the purpose of what your intent to spend the money on. Lenders will typically allow you to raise monies for home improvements, buying another property and even to consolidate debt.
To find out how much you can borrow and how much this is likely to cost it is best to arrange a time to chat with an independent mortgage adviser.
The actual amount you can borrow will depend on your credit commitments, your regular monthly outgoings and how each lender assesses your income.
Lender’s affordability checks can differ meaning that the amount you can borrow may change from lender to lender. That’s where the expertise of our personal advisers comes in and where our independent status benefits you.
There aren’t necessarily any costs to you with remortgaging however costs typically include administration fees and lenders’ product arrangement fees. It is relatively common to save £200+ per month by remortgaging and if there are any costs involved with remortgaging, these are quickly recouped from the monthly savings – some lenders pay you to remortgage to them! There are 1000’s of deals available and our experienced independent mortgage advisers will calculate what it the best deal for you, focusing on saving you time, as well as money!
It’s often a requirement of your mortgage to have buildings insurance. This covers the bricks and mortar of the property.
It’s also a good idea to take advice from your personal adviser on protecting you and your loved ones if something bad happens. For example: Life Cover, Critical Illness Cover and Income Protection.
In most circumstances it will be worth remortgaging once you come to the end of your initial product period, as if you do nothing you will end up moving to the lenders standard variable rate. This will mean your monthly payments will increase and you will pay more then you potentially need back to the bank.
If you are thinking about remortgaging for a different reason, such as raising monies for home improvements, or are on the standard variable rate then please speak to one of our independent advisers to see how we can help you.
Remortgaging doesn’t have to be time consuming. By speaking to one of our independent mortgage advisers, we will save you time by searching 1000’s of deals, to find you the best deal that suits your objectives and circumstances. We will then process your application saving you time by chasing the lender on your behalf. Your dedicated relationship manager will also keep you informed throughout the full process of your application.
Because we are independent mortgage brokers we will be able to secure you the best deal for your circumstances.
Being accepted for a mortgage does depend on your circumstances. We are experts with all types of mortgages…. We specialise in obtaining mortgages for the self-employed, contractors, construction industry scheme (CIS) workers and those with historic adverse credit (as well as employed customers of course). In all these situations we can frequently secure high street deals. Being independent and experts is a real benefit in these circumstances.