What is a remortgage?
There are many reasons that people consider a remortgage; raising cash, reducing payments, consolidating debts etc. Remortgaging entails negotiating with your current lender for a new deal or looking to other lenders in the marketplace. If you get it right it can give great benefits, if done incorrectly you can be saddled with a bad deal for years. This is why you should take some professional advice before making a commitment.
Should I Remortgage?
If you are about to come to the end of your introductory offer it is a great time to think about remortgaging. At the end of your introductory offer your monthly payments are likely to go up, this means that your mortgage will cost you more each month and you will have less disposable monthly income. A lot of people are still not remortgaging as they have a brand loyalty to their mortgage provider this is costing UK home owners millions each year. Think of your mortgage likely you think of your energy supplier, if you can find a better deal that will save you money each month then why wouldn’t you want to switch. If you have a clean credit history and good income, you have built equity in your house over the terms of the mortgage you have already paid, this puts you in a great position to remortgage and get the best rate.
If when you took out your mortgage you had a low deposit, bad credit or lower income but are now in a better position it could also be time to think about remortgaging. If you had less than perfect circumstances is it likely that you didn’t have access to the best deals. Now your situation is better you are more likely to have access to the best deals on the market with equity in your house more lenders will be willing to lend at better rates.
Alternatively, if you are in worse circumstances now than you were when you took out the original mortgage it may not be the best time to consider remortgaging. It would be better to work on your credit score before remortgaging then you will have more equity and a better credit score allowing you to get better deals. If you are looking to remortgage to make home improvements but are in worse circumstances it may be worth looking at a secured home owner loan, check out our page on second mortgages for more information.
How to get the best remortgage deal
If you have a clean credit history and good income then you are in a great position to remortgage. The main thing lenders are looking for is equity if you have a good level of equity in your home, no bad credit and a good salary you should be able to get the best deals out there. Take a look on the comparison sites, speak to your current lender. Check the rate they offer you to see if it is competitive, if it isn’t then you can consider switching to a new lender. We find customers tend to use brokers to compare due to the time consuming element of looking for the best deal and applying. Using a fee free broker for your remortgage can be a great idea. Your broker will search thousands of deals to ensure you are getting the best rate and will be with you through the full application process so you won’t have to worry about finding time to fit everything in and its free for you! Speak to one of our specialist remortgage brokers today to save you thousands in interest and time!
Fee Free Remortgage
A lot of lenders offer fee free remortgages, this is because it is a much more simplified process than actually buying a house. You have already been through the process of buying the house, getting surveys, inspections, the legal process etc. Lenders will want to ensure that the value of the property is correct but some will use online valuations for these and wont do a full valuation. Then it is simply transferring the charge on the property (mortgage) from one lender to another. Lenders also want your business, especially if you have a good standing with a good level of equity. This is why many lenders offer free valuation, free legal service, and many offer no product fee.
With so many lenders and so many different products to compare it is good to speak with a specialist broker, explain you are looking for the best deal with no fee’s and see what they come up with.
Choosing the right remortgage term
Choosing the right mortgage term tends to come down to your personal circumstances and monthly budget for mortgage repayments. generally 25 years is the standard mortgage term. If you have a good monthly budget you can get a shorter term mortgage which means that you will be paying less interest on your mortgage and will pay the balance of quicker. If you are young and are working your way up the career ladder you may look at longer terms to give you a lower monthly payment now and re consider when you are on a bigger salary, this will give you more disposable income but will mean you pay more interest in the long run on your mortgage.
When considering the term of your mortgage it is a good idea to do a budget and then you will know how much you can comfortably afford to pay each month this will allow you to know the best term to go for.