Should I remortgage, and what’s involved in doing so?
Remortgaging is the process of moving your current mortgage from one deal to another, whether that be with the same lender or moving to a new one. Just like you may shop around for new home insurance or energy rates, you can shop around for a new mortgage rate too. Just like you did when you first took out your mortgage, it's really important to re-evaluate your mortgage now and then.
There are loads of different reasons why you might want to re-mortgage, the most common ones are usually:
You've come to the end of your fixed-rate period and monthly payments have increased.
You wish to borrow more
You want the ability to overpay your mortgage payments and you don't currently.
You want to move from an interest-only mortgage to a repayment one
You want to take advantage of low interest rates
Your home value has gone up, and you want access to lower mortgage rates
You want a more flexible mortgage - Where you may be able to take payment holidays or link your current account for other benefits.
There are some things you might want to consider before you go to remortgage, however. It's not the best thing to do in all cases.
Check whether you have any early repayment charges on your current mortgage
Early repayment charges (ERCs) are usually in place during a fixed-rate period of your mortgage, which is just a fee to exit the fixed period early. Put simply, if you're considering moving to a new mortgage, but the early repayment charge of your current deal is more than the saving of your new potential mortgage, it's not worth switching.
Be mortgage ready
When you come to remortgage, whether you get a new deal with your current lender or move to a completely new lender, you're more than likely going to need to go through a similar process to when you first got your mortgage - Think proving your income, identity and financial situation again.
If your financial situation has changed since you first got your mortgage, you need to be sure you'll be accepted for your remortgage. Some of the most common reasons you might not be mortgage ready could be that you've stopped working, had credit issues since your first mortgage, or the value of your property has dropped significantly.
You're always best speaking to a mortgage adviser or broker who can discuss your options in full with you before making any credit check or mortgage application - That way you know exactly what to expect.
Compare what rate you're currently on
Here you may need a copy of your most recent mortgage statement. You want to see what mortgage rate you're currently on, and then use our online mortgage finder to see what rate you could possibly get. From this, you can then see how your current mortgage stacks up against what's available in today's market. Lenders are always bringing out new mortgage deals, some better than others, so it could be that you got a great mortgage deal that isn't available anymore. Here, it could be better to stick with your current mortgage.
Put simply
Whatever your circumstances, if you're looking to remortgage you're always best doing it sooner rather than later. If your current deal is coming to an end, the sweet spot is between 3 and 6 months before your end date.
As always, we'd love to speak with you about your mortgage requirements. Get in touch with us here, or book a free call to chat with a broker here.