Remortgaging Quotes Can Save You Money
What Is Remortgaging? Why Should I Do It? And Can I Save Money?
1. Your Current Deal Is About To End
Many of the best mortgages only last a short time. This is often two to five years; the typical length of time offered on a fixed rate, tracker or discount mortgage.
When it ends, your lender will put you on its standard variable rate (SVR). It’s likely to be higher than your old interest rate and higher than other rates available. If so, you want to switch to remortgage with a cheaper rate. Start looking about 14 weeks before your current deal ends.
2. You Want A Better Rate
If you are tied into an initial deal then you might have to pay an early repayment charge. This can be huge, often 2-5% of your outstanding loan. There is also usually a small exit fee when you repay any mortgage.
This doesn’t mean you shouldn’t consider it. The savings can be huge. Especially if you have a large mortgage debt. Just do your sums before making any decisions.
3. Your Home’s Value Has Gone Up… A Lot
Has the value of the property risen rapidly? If so you may find you’re in a lower loan-to-value (LTV) band. This means you are eligible for much lower rates. Again, you need to do your sums but it’s definitely worth investigating.
How Does LTV Affect The Mortgage Rate?
Lenders base their rates to customers on the cost to them for lending the money, and risk the loan will not be paid back. Therefore if you are borrowing at 90% LTV, the risk of the property not being sold for enough to repay the loan plus costs is higher than at 70% LTV – so the rate is likely to be higher.
There’s far fewer remortgages at 90% LTV and as a result the range to choose from is limited. This lack of competition also creates higher rates, with the most competitive deals being 75% LTV and below – as this is safer business and covers a lot of the population.
4. You’re Worried About Interest Rates Going Up
Check what is meant by rates going up. If it’s the Bank of England base rate that is predicted to go up, this may affect your mortgage payments directly. This depends on the type of mortgage you have. If you’re on a fixed deal it won’t affect you but a tracker could mean higher monthly payments. If it’s just the rates that new customers are being offered, then this won’t affect you either.
5. You Want To Overpay And Your Lender Won’t Let You
Have you had a pay rise or inherited some money? Do you now want to pay more but your current lender won’t let you? A remortgage will reduce the loan size and maybe get a cheaper rate as a result. Watch out for any early repayment charges or exit fees and compare them to how much you’d save with the new, lower mortgage.
6. You Want To Switch From Interest Only To A Repayment Mortgage
You shouldn’t need to remortgage to do this. Your lender should make the change for you.
You can even change part of the loan to capital repayment. This would leave some on your interest-only deal. This is particularly useful for anyone with an underperforming endowment mortgage i.e. something which is expected to result in shortfall at the end of the term.
It’s different if you want to change from capital repayment to interest only. Expect difficulties when trying to do this
7. You Want To Borrow More
Maybe your current lender has said no to lending you extra money. Or the terms it’s offering aren’t very good. Remortgaging to a new lender might raise money on low rates. Remember to take all the fees into account. You must see if it really is cheaper than other forms of borrowing.
The new lender will ask you what the extra money is for. They will not lend you money to start a new business but if you want to borrow for a new car this may be acceptable.
The most commonly acceptable reasons to raise money are home improvements and paying off debts. Be prepared for your lender to ask for evidence if you are borrowing a large amount.
How Does Borrowing Purpose Affect The Mortgage Rate?
The type of remortgage you want also affects which lenders you can choose. For instance, debt consolidation at 90% will only be possible with a few lenders. Borrowing to buy a new property may be limited to 80% LTV with some lenders and 90% with others. For more info on this see our remortgage guide.
8. You Want A More Flexible Mortgage
Do you want to be able to miss a payment? Are you changing jobs? Going back into education? Travelling? Whatever the reason, there are mortgages that let you take payment holidays.
Whatever flexibility you want in a mortgage, it’s likely out there. Remember products don’t offer fancy features for free. You’ll pay for these with a slightly higher interest rate. Only pay for extras if you will actually use them and benefit from them.
Use our calculator to find the best remortgaging conveyancing quotes around.
If you plan to remortgage and have done all your research, you will need to contact an impartial mortgage adviser. You can discuss what remortgage deals are on offer. Once you have chosen the appropriate mortgage you can then ask the mortgage adviser to arrange the mortgage and you will then receive an ‘offer in principle’.
You will be asked to pass over your existing mortgage / loan details. Your instructed conveyancer will then ask your lender for the title deeds to your property. They will also need a redemption statement for your existing mortgage. You may not have realised you need a conveyancer which is where Conveyancing Supermarket can help with competitive remortgage quotes.
Your new lender will carry out a valuation on your home and make a formal loan offer. This is then sent to your instructed solicitor. They will go through the lenders requirements and any stipulated requirements will be discussed with you.
Only sign the mortgage documents when you are satisfied with the details. Always make sure you can meet the lender’s requirements.
If you need further information you can use the Help & Resources section on our website where we have a wealth of knowledge and advice.