How to Remortgage
What is a Remortgage?
A remortgage, put simply, is the act of taking out a new mortgage in order to pay off your existing home loan. It is usually carried out in order to secure a better interest rate and thereby keep monthly payments to a minimum.
But, according to Which?, a staggering 1 in 3 people with a mortgage don’t even know what rate they are on and 25% of respondents to their survey are on their lender’s Standard Variable Rate meaning they are paying, on average, £347 more every month than they need to be.
Who Can Remortgage?
If you can say YES to the following list of criteria:
1. Do you have a mortgage?
Then you can probably get a remortgage!
In fact (as long as you haven’t missed any mortgage payments) even if your circumstances have drastically changed since you took out the mortgage there is every chance you will be able to switch your mortgage to another fixed rate deal with your existing lender in a matter of days. No questions asked.
When Should You Remortgage?
If you have a mortgage with a fixed rate it will usually have an Early Redemption Charge (ERC) if you pay off the mortgage before the end of the fixed rate period. This ERC is usually 1 or 2% but can be as high as 5% or more of the total outstanding loan depending how far from the end of the tie in period you are.
Some lenders allow you to switch product up to 6 months before the end of your tie in but if there is 3 months or less until the end of your fixed rate period then it is really important you start to sort out your remortgage as soon as possible. It will likely take at least 6 to 8 weeks to arrange whilst in some complex cases it can take even longer and you really don’t want to slip onto your lender’s Standard Variable Rate (SVR) and end up paying more than you need to each month.
If you’re already on your lender’s SVR then stop reading this and get in touch straight away as you are throwing money down the drain and I am certain I can help bring your monthly mortgage payments down!
How to Get the Best Mortgage Deal
Most people start their search for a new mortgage on one of the price comparison websites. This is a great way to find out what might be available to you but if you really want to compare the whole market then it is imperative you speak to a whole-of-market mortgage broker as there are a number of lenders who only work through intermediaries, so you won’t find their deals on any website.
And a fluffy meerkat toy is not going to make up for spending more on your mortgage each month than you need to, no matter how cute he is.
How Can I Help?
Most good brokers, like me, offer a completely free mortgage consultation and will gladly discuss your options with no pressure or obligation to go any further than just a chat.
During this initial discussion, I would gather a bit of information about your current position and what you want to achieve and then I’d be able to make some tailored recommendations based on your personal circumstances such as employment/income, existing debts, credit history etc.
These recommendations would each come with a mortgage illustration, detailing the terms of the prospective home loan. Amongst these details you will find the length or term of the mortgage, the total amount you might be able to borrow, the interest rate it would attract and your monthly payments.
Applying for A Mortgage
Once you have found your perfect remortgage the hard work begins! The next step is to get a Decision in Principle (DIP) from the lender which is confirmation that they would be willing to lend you the money.
Assuming they agree, you must then submit a full mortgage application. Make sure to be completely honest and don’t make any mistakes because lenders are a pretty unforgiving bunch and any mistake or ‘little white lie’ could not only affect this application but all future applications too.
The lender will ask you to submit evidence to back up your application, such as payslips, bank statements, proof of ID etc. and they will book in a valuation to ensure the property is worth the money you claim.
The lender will also instruct a solicitor to carry out the legal due diligence in order to make sure everything is above board. It is worth remembering, the solicitor works for the lender and not you, even if you have paid for them.
After you have jumped through various burning hoops and walked across numerous beds of burning coals the lender should give you a mortgage offer. Sign on the dotted line and the funds will be transferred to the solicitor who will disperse as previously agreed.
Or you could let me do all the heavy lifting whilst you sit back and relax. I will submit the application on your behalf and liaise with the lender, solicitor, valuation surveyor, estate agent, next door neighbour and anyone else I need to, keeping you abreast of progress at every stage.