So just what is remortgaging? In very simple terms, remortgaging is replacing your existing mortgage with a new one – whether that is with your existing mortgage lender or a new provider.
Why consider remortgaging?
You may be considering remortgaging for a number of reasons, including:
- Your existing fixed rate mortgage is coming to an end
- The great deal you initially got on your mortgage has already ended and you were switched over to a rate that you aren’t happy with
- You want to switch from an interest only mortgage to a repayment mortgage
- You think you can find a better deal than your existing mortgage
- You would like to borrow more against your mortgage for home improvements, a special purchase or debt consolidation
- You would like to overpay your mortgage and your existing lender won’t let you
- Your life circumstances have changed and your current mortgage doesn’t quite suit your needs anymore.
On the other hand, why might remortgaging not be the best option?
Remortgaging may not always be the right solution for your circumstances, and sometimes may not even be possible. Here are a few things to consider:
- You may find that you are already on a great deal, and that it’s not worth your while switching
- If your remaining mortgage debt is relatively small, around £50,000, then it may not be worth remortgaging as the fees involved could be very high compared to what you would save by switching. If your debt is below £25,000 – £30,000 then you may also struggle to find a lender
- Since you took on your mortgage your circumstances may have changed, your credit history may not be so great and on paper may not look as appealing to a lender. The Financial Conduct Authority requires lenders to ensure that the mortgage is affordable to the customer, so lenders are very selective about who they give a loan to
- If you’re looking to borrow 90% or more than you may find that it’s difficult to get a better rate than your existing mortgage
- Early repayment fees can be very expensive, meaning it may not make good financial sense to refinance.
- Your existing lender can offer a follow on rate from your original deal or even additional funds as a further advance that is cheaper than switching lenders
So what do I do now?
You’ve considered the pros and cons, thought about whether a remortgage or further advance is right for you and your circumstances so what do you do now?
- Check your credit rating so there are no nasty shocks in-store when you start applying for a remortgage.
- Check your existing mortgage paperwork to find out whether there are early repayment fees or exit charges and what amount those are.
- Find out what your property is worth. You can use online valuation tools or ask an estate agent to get an estimated value
- Check your last mortgage statement to discover how much is left to pay on your existing mortgage and work out how much you would like to borrow
- Work out your average monthly expenditure currently – remember to allow for rising costs
- Decide how much of your disposable income you are willing to allocate to mortgage payments
- Decide what type of mortgage you need; are you looking for fixed rate, interest only, repayment, variable, offset or current account? You should speak to an independent mortgage advisor who can help advise on the best options for your situation and circumstances.
- Get online and start looking for your deal! There are many mortgage deals and options online, so start doing your research and find out what options are available to you. You can click here to check out our own remortgage calculator for the best deals we have available and don’t forget to speak to your current mortgage lender to find out whether they can offer you a better deal or match one that you have found online.
- Next you should consider getting an Agreement in Principle. This will let you find out if a lender is willing to lend the amount you require but usually involves a soft credit check, so wouldn’t impact your credit rating. You are then able to compare mortgage deals and understand the options available to you. It is worth mentioning though that an Agreement in Principle is not a guarantee of a mortgage. Do remember to take costs into account when comparing the remortgage deals you are looking at. These can include mortgage fees, booking or completion fees, solicitors fees, conveyancing or property valuation fees along with your early repayment or exit fees.
- Once you have your Agreement in Principle, have weighed up the options and have decided on a remortgage deal, it’s time to apply for your remortgage. Your chosen lender will walk you through the next steps and what documentation you need to provide to complete the remortgage. It can take around 4-8 weeks to complete a remortgage after applying, dependent on your circumstances.
This is, of course, not a definitive list and extra steps could be needed if for example you own your own business, or have a more complicated credit history. More information about remortgaging can be found online with many lenders providing further information and guidance on their offerings and requirements. Our team at Positive Mortgages are also happy to discuss any queries you may have about refinancing, and have many years experience in dealing with remortgages cases of all different kinds – simply click here to contact us today.
And remember, it is always advisable to seek independent advice when dealing with financial issues.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.