If your current fixed term coming to end? You may want to cut down your monthly mortgage costs? Are you looking for better remortgage deal?
In such situations, borrowers often choose to remortgage with the help of a remortgage broker.
If you are new to the world of mortgaging, don’t know where to start here is the ultimate guide to remortgaging for you.
Let us start with the basics.
What Do You Mean By Remortgaging?
In simple words, remortgaging is the process of moving the mortgage on your property from one deal to another. It allows you to replace your existing mortgage with a new one on the same property. If you are thinking about remortgaging your property, make sure you work with the best mortgage broker and get yourself the best mortgage deal in the market.
There are two major ways in which you can remortgage your property – you can either opt for a new mortgage deal with the existing lender or switch to a new lender for a new deal. It is important to make the right choice based on your specific needs and preferences.
Why Do People Remortgage?
There are several reasons why people choose to remortgage their properties. Here are some of the most common and relevant reasons:
Reaching The End Of Your Current Deal
You may also want to remortgage if your existing mortgage deal is coming to an end. In the case of tracker, fixed-rate, and discount mortgages, the term often ranges from 2 to 5 years before the deal reverts to the SVR (standard variable rate) of the lender. This is likely to cost you a lot of money. In such cases, you can switch to the most cost-effective mortgage deal before your existing deal ends.
Borrowing Money Using Your Mortgage
After getting a mortgage deal, there may be situations when you are in need of money for making repairs in the house, upgrading the new property, or paying off your debts. In such cases, remortgaging allows you to borrow money on your mortgage deal. If your existing lender refuses to lend you more money, you can switch to a cheaper mortgage deal for releasing the required equity and borrowing some money.
Switching To A Different Mortgage Type
Another common reason why people choose to remortgage is to switch mortgage types. In most cases, borrowers prefer shifting from an interest-only loan to a repayment mortgage. Whatever the situation is, lenders often easily allow the switch between different mortgages if you have a valid reason for the same. Generally, borrowers are looking for more flexible options while switching between different mortgage types. If you are willing to go down this route, make sure you consult your mortgage broker and choose a deal that best suits your needs.
Taking Advantage Of A Rise In Your Property’s Value
Remortgaging is also a good option if the value of your property increases significantly since you got yourself a mortgage. Whether it is due to renovations, developments around the property, or expensive extensions, you can take advantage of this increment by switching to another deal.
When the value of your property increases, you would fall under a lower LTV (loan-to-value) band as compared to your status while applying for the existing mortgage. As you would now be eligible for lower interest rates, remortgaging would help you save your money by getting yourself a cheaper deal.
Is Remortgaging An Easy Process?
Yes, remortgaging is a fairly easy process, especially as compared to getting yourself a new mortgage deal. If you work with a skilled mortgage broker, you can find the best remortgage deals in the market. In order to remortgage your property, all you need to do is find yourself an ideal new deal, make an application for the same, and your lender would handle the rest. Although most remortgage cases require a valuation, a few lenders may provide you with automated services for properties with low LTV ratios.
Does Remortgaging Take Too Long?
Remortgaging does not take too long as compared to getting yourself a fresh mortgage. From beginning to end, the entire process should take around four to six weeks. You can get the work done faster if your application is full-proof, your credit score is good, and your property is in great condition.
Important Remortgaging Costs To Consider
Here are some of the most important remortgaging costs you need to consider before making your application:
- Arrangement Fee – This is the fee charged by your lender for arranging a new mortgage deal for you. The amount to be paid depends on the lender and the mortgage deal you are willing to apply for. The arrangement fee can either be a fixed amount or a percentage of the total amount you are willing to borrow.
- Booking Fee – This is a non-refundable one-off fee charged by some lenders over the arrangement fee. Before you pay this fee, make sure you ask your lender if it is applicable for your deal.
- Legal Fees – These are the fees you will have to pay if you are willing to hire a solicitor to handle the legal aspects of your remortgage deal.
The Final Word
These were some of the basics of remortgaging one should keep in mind before applying for the same. If you are new to the world of mortgaging, it is advisable to take the help of the right brokers and advisors who would guide you every step of the way.
