What does remortgaging mean?
You’ve most likely heard of the term remortgaging but could be a little unsure what it means. In short, it’s moving your mortgage from one deal to another, whether you stick with the same lender or move to another one.
What to consider before remortgaging
How long is the remortgage process?
The remortgage process can take anywhere between four to eight weeks after you apply for your mortgage. Occasionally this process can be quicker, but it depends on your circumstances and the lender.
Why should you consider remortgaging?
Better rate
A common reason for remortgaging is to switch to a better rate. This can lower your monthly repayments which can reduce your overall monthly bills, freeing you up to spend the excess money elsewhere.
You want to make overpayments
However, depending on your circumstances, you might want to actually increase your monthly repayments. This can help you to become mortgage-free sooner. Our expert advice article can help give you more advice on this.
Avoid SVR
You might want to avoid falling onto the lender’s SVR (standard variable rate) if your current mortgage term is coming to an end. This is a rate set by your lender and is often higher than your original remortgage interest rate. It’s advised to remortgage before you go onto this rate to ensure you aren’t paying more than you need to.
Borrowing more money
Thinking of renovating your home this year? Possibly a new kitchen or a loft conversion? Remortgage can help fund your renovation project by allowing you to borrow more and use the money for home improvements. Take a look at our home improvement calculator to work out how much your renovation might cost.
Your property has risen in value
If the value of your current property has risen since you last took out your mortgage, you may find you’re eligible for much lower rates.. This can be worth exploring to ensure you aren’t paying more than you need to.
Does your credit score need improving?
Having a poor credit history can be a worry at times, and this may affect how much you can borrow when it comes to your remortgage. A poor credit score indicates to the lender that you could be a risky borrower. Your mortgage adviser can help find the right mortgage for your circumstances.
Is it the right time to remortgage?
We advise to start looking for a new mortgage deal around three to four months before your current deal ends, to ensure you’re on the right rate for you. If you’re wanting to leave your current mortgage deal before it ends, you may have to pay an early repayment charge. The exact amount depends on your lender, as well as the type of mortgage you currently have.
Can I remortgage when I have just started a new job?
Starting a new job can make remortgaging a little more difficult. Lenders prefer that you wait at least six months before applying for a mortgage. However, some lenders may approve this sooner.
A step-by-step process to remortgaging:
- Step1: Ask your current lender for a closing balance so you know exactly how much you need to pay off the remaining of your mortgage. That’s how much you’ll need to borrow to remortgage, and we recommend you do this around 6 months before.
- Step 2: Speak to a mortgage adviser. We have access to over 12,000 mortgage deals, some of which aren’t available on the high street. We can also offer specialist lending.
- Step 3: Consider all the costs. A mortgage adviser can break these down in more detail:
- Application fee
- Any possible early repayment charges
- Valuation fee
- Solicitor’s fee
- Step 4: Complete an Agreement in Principle (mortgage in principle), to find out if a lender is willing to lend the amount you need and what your options are. Our friendly adviser can help complete this for you, with all the necessary information.
- Step 5: Our advisers will find the right mortgage for you and handle your application.
- Step 6: Your lender will run a credit check.
- Step 7: Your property will be valued.
- Step 8: The new lender will send you the mortgage offer letter.
- Step 9: Review the offer with your adviser to ensure all details are correct and that your circumstances haven’t changed.
- Step 9: A solicitor or conveyancer will manage the transfer of your mortgage (requesting the money from the new lender to pay of the old mortgage), and register your details with the Land Registry.
We understand that when remortgaging your home, you want to make sure you get the right deal for your circumstances. Here at Mortgage Advice Bureau in Fareham, we have a team of mortgage advisers to help make sure you’re making the right decision when it comes to you and your mortgage.
Get in touch with us here to discuss all your possible remortgage options.
You may have to pay an early repayment charge to your existing lender if you remortgage.