Six Essential Considerations Before You Remortgage
Six Things to Consider Before Remortgaging
In the UK, more than 30% of home loans are remortgage deals. Remortgage refers to the legal act of changing the terms of an existing mortgage on a property. While conventional mortgage deals can trap homeowners into a system of inflexible payments, remortgaging can reduce the interest rate of your mortgage.
When looking for a suitable remortgage plan, here are six things you should consider before sealing the deal:
The Value of Your Property
House prices rise and fall depending on the state of the property market. To get a clear value of your home, invite two or three estate agents to value your property. The higher the worth of your property, the lower your loan-to-value (LTV) will be on your remortgage. When you have a low LTV, you will inevitably have a lower interest rate.
Meeting the Lender’s Criteria
It is important to check if you tick all the boxes on your lender’s criteria, such as the required employment status, minimum monthly salary and credit score. If you met all the requirements but your circumstances have changed since you took on your existing mortgage, you can ask your lender if you still qualify for a new one.
Loan Flexibility
When renewing your mortgage, consider how flexible it is. Aside from the interest rate, understand the restrictions of the loan and find out if your lender offers prepayment options. Some lenders, for example, allow you to pay your debt on your own terms since there are no payment restrictions. This also gives you the freedom to access the equity in your home up to your borrowing limit when you need it.
Lender Options
When it comes to remortgaging, loyalty does not always pay. In fact, according to a report by Money Mail, six out of ten of the largest lenders in the UK charge their loyal customers higher rates than those who switch from lender to lender. Staying with your current mortgage provider can leave you paying up to £300 more than new customers. When you are ready for a remortgage, gather your options and select a lender with the best rates.
Extended Early Repayment Charges
For fixed rate or term remortgaging, such as a three-year fixed rate or a two-year discount deal, you will need to find out what happens once the term ends. Avoid extended offers, as some lenders often require additional fees without your knowledge. Before signing a contract, talk to a remortgage solicitor about the deal. They have experience dealing with repayment fees from fixed rate remortgage offers and help you acquire a deal that suits your needs and budget.
Your Financial Goals and Needs
Your financial objectives may have changed since you started your existing mortgage term. Before signing onto a remortgage deal, conduct a careful assessment of your current financial situation and future needs. This puts you in a better position to select a remortgage deal that best suits your requirements.
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