Remortgaging is where you take out a new mortgage on your home or a property that you already own. This will replace the mortgage you have already got.
A lot of people can feel negatively towards the possibility of remortgaging, however there are some really good reasons to do so! Read on to find out a bit more about the remortgage process, and maybe why it could be the best thing for you.
Why should you remortgage?
Bear in mind, this isn’t always an option. In some cases, remortgaging may not be beneficial and not worth going through the process of. However, for others it can be necessary and have a positive impact.
You should consider remortgaging firstly, and obviously, if your current deal is about to end. Usually, the best mortgages only last a short time (2-5 years). When this comes to an end, generally the lender will put you onto a generic mortgage rate – which tends to come with a higher interest rate than you previously had. If you want to remortgage for a cheaper rate, you must be ready a few months before your current mortgage ends to look around to find a better rate for you. If you speak to a mortgage adviser, and follow the mortgage process with them, they will most likely alert you a few months before your remortgage date in order to help you find the best deal.
Completing a remortgage is done for a variety of reasons mainly to save money is the most common reason and can be alikened to switching Gas/Electric providers etc to save money a mortgage is for most people that have one their largest monthly outgoing so why would you not review this this as you would your other bills. A mortgage is a debt and the way of saving money is by acheived the lowest APR rate in terms of repaying it. If two customers borrowed exactly the same amount of money over the same number of years and one is paying a rate of 2% and one of 4% the 2% payments will be less they will both be repaying the capital but less interest charged on the lower rate
There are a lot of customers/clients that one there intial rate has ended then move on to a standard variable rate and generally speaking this is higher than a new rate or new deal offered by many lenders doing remortgages. Most lenders will also cover the main costs in remortgaging such as Valuation costs or legal fees.
The ideal time to review your nortgage is around 3-6 months before your intial rate ends and a new deal can be applied for however its important the new deal does not complete until your current rate has ended to avoid costly penalitys, in some scenerios it can be benifical to move before the rate ends but its importnat to seek advice and our qualified advisors will advise on this scenerio.
On the topic of rates, you can remortgage if you want a better one. Remember that if you wish to change your initial deal there will likely be an early repayment charge. These can be very large so it is definitely best to consider your options. Despite this, even with the charge, it can be a huge financial benefit in the long term to remortgage early if you have a poor rate, most especially if you have a greater mortgage debt. Just make sure that you do thorough research and it would be recommended that you consult an adviser before you go ahead with a remortgage.
Another reason you may want to remortgage is if the value of your home has risen. Depending on the increase, you may become eligible for lower rates as you will be in a lower loan to value bracket. It is again probably best to speak to an adviser before you go ahead with this.
Remortgaging should also be considered if you wish to pay more on the mortgage. You may find yourself in a more comfortable financial position, whether that be through a pay rise or an inheritance and therefore wish to pay more to the mortgage. Most lenders (not all) will not let you do this on a current mortgage deal. If you remortgage, you will be able to reduce the size of your loan, potentially get a cheaper rate and then possibly save money. However, as mentioned before, exit fees can be large so it is a good idea to work out how much you will save compared with the cost of the fee to find out what your best option is.
The ideal time to review your mortgage is around 3-6 months before your initial rate ends and a new deal can be applied for however its important the new deal does not complete until your current rate has ended to avoid costly , penalties sin some scenarios it can be beneficial to move before the rate ends but its important to seek advice and our qualified advisors will advise on this scenario.
Other reasons people want to remortgage
- Remortgage for a better rate
- Remortgage for saving money
- Remortgage for debt consolidation
- Remortgage for home improvements
- Remortgage for holidays and cars
- Remortgage from a non main stream lender
- Remortgage to capital raise for other purposes
There are a few scenarios where you may want to avoid a remortgage. If your debt is small (e.g. £50,000 or below) it may not be worth changing your lender/remortgaging. You most likely won’t save any money, whether that be down to service fees or early repayment fees, so it could be best just to wait for the mortgage to come to an end. Other situations you may want to avoid remortgaging in is if you have had credit problems within the time of taking out your last mortgage, if your house decreases in value or if you have a very small amount of equity.
Again, it is always best to speak to an adviser before you rule anything out. Even if they can’t offer you the go ahead for a remortgage, they can give you advice on what to do under your specific circumstances. They will know what is best for you, so it is worth getting that help before proceeding with, or giving up on, your mortgage journey.
Of course, if you have any other reason for wanting to remortgage, just because it isn’t mentioned here doesn’t mean an adviser won’t be able to help you! Speak to an adviser here at View Finance today on 0333 320 8658 and see what your options are. Don’t be afraid to ask questions; that is what advisers are here for.