Remortgaging

Remortaging FAQ

• What Is Remortaging?

  Put simply, you switch your mortgage to another lender and save money. If you are not going to save money and get a better deal then there is no point in switching.

• Is Remortaging Difficult?

  No. It is easy. For many years mortgage lenders traditionally stayed loyal with their lender their building society, bank or other financial service provider. Now more and more consumers are becoming savvy as they realize that remortgaging their property is easy. At any given time some mortgage lenders will be offering great deals to entice new customers and if you dont take advantage of them from time to time then you are missing out. A few phone calls and some research or a meeting with a financial advisor and you could be on your way to saving thousands of pounds.

• How Much Can I Save?

  Lots. Depending on your current mortgage - as much as 200 a month. Thats 2,400 a year. Multiply that over a 25 year mortgage and you get the idea how important a successful remortgage can be to your familys finances. Think of the nice holidays, new car, or vital house improvements that the savings or extra loan could be spent on. Even saving 20 a month is a considerable amount over the year and over the term of your mortgage.

• When Is The Best Time To Switch?

  Anytime is a good time to switch even if you have done so previously. An ideal time might be at the end of a fixed deal when you find your mortgage transferring to a more expensive variable rate. Especially if Bank of England interest rates are going up and your nice two-year or three-year fixed deal is coming to an end. At this time you may want to consider switching as soon as you can to avoid your current lenders more expensive rate. Equally, if you have been on a variable rate deal which saw your interest rates lowering throughout the year but then if you find that the tide is turning and you see your variable rate rising at an alarming rate then this could be a good time to switch, perhaps to a fixed rate offering a good tie in deal for a few years. Remember, as long as you are free to change mortgages and you move to a better deal, taking into account any costs associated with the switch, then it is advisable to do so.

• So What Are The Very Best Times To Switch?

  You are paying an expensive Standard Variable Rate (SVR) and you can see much lower deals, usually fixed deals, available.

  Your low fixed deal is ending and you are about to transfer to a horrible Standard Variable Rate.

  You current deal which seemed a bargain has turned sour due to changing market conditions. Even with severe financial penalties from your lender for switching it can still be worth remortgaging if there are better deals available.

• Apart From Saving Money, Any Other Advantages To Remortgaging?

  Remortgaging is an easy transaction which for most people will save them more money than any other simple financial transaction but it can be used for other purposes rather than just saving on expenditure.

  Remortaging is a good way to enter the buy-to-let market. Increased competition among lenders means there are great deals around so switching could release money to enable you to buy a second property for rental. With extra funds, a mortgage on a second property could be repaid via rental income, creating a nice potential nest egg for your retirement.

  Remortgaging may also be the sensible way to consolidate credit card and personal loan debts.

  Remortgaging can be used to borrow more cash. Many people who have bought a property in recent years in the UK have benefited from a boom in house prices. By remortgaging, as well as switching to a cheaper interest rate and lower monthly repayment amount, you could also borrow extra money to improve your home - such as building an extension or paying for essential works.

• So Whats The Catch?

  Remortgaging is not without its dangers but as long as you are sensible there should not be anything to worry about. You need to consider any costs carefully though. There may be expensive fees to switch lender. You need to be aware of these and calculate carefully what your saving will be. You need to ensure you are going to save money and that there are benefits to switching your mortgage. There may also be penalties when you quit one lender for another. Check your current mortgage conditions carefully. If you use a broker to locate/arrange a new mortgage you may also have to pay fees there. You can save money though by finding a deal yourself. The Internet is a great place to compare current deals. Review Centre offers links to price comparison data and other advice sites.

• How Do I Remortgage? Whats The Procedure?

  1. Prepare properly. Check the details of your current mortgage carefully including the amount outstanding, your monthly payments, the repayment period and any charges for switching. These will be on your recent statement and you can also speak to your lender. While doing so you can ask them if they can offer you a better deal. You may be surprised by the results of asking for a better rate if you are considering switching.
  2. Select the mortgage you want. Do some Read the financial advice pages in your national newspaper. Check comparison tables online. Make sure you are targeting the best deals the moment. Consider the type of mortgage. You may wish to switch to a repayment mortgage if you have had an endowment mortgage which has not been satisfactory. You may wish to switch from variable to fixed if the conditions are favourable or vice versa.
  3. Compare costs carefully. Typical costs include administration and arrangement fees, legal expenses, valuation fees on your property. Make sure it is a better deal.
  4. Speak to the lenders and compare quotes. When satisfied with the best deal fill in the required application form. Your new lender will then you and arrange a valuation.
  5. If everything is approved the new lender will arrange the handover of your mortgage. Check your new direct debit is organized with your bank and enjoy your savings.

• What Costs Do I Need To Be Aware Of?

  Consider your building and contents insurance (Home Insurance) and make sure you get the best deals. Beware of mortgage offers with compulsory insurance tie ins. These are usually overpriced. Compare and search for the best insurance deals yourself.

  Beware of fees for leaving your existing lender. Early repayment charges, also known as the redemption fees are charged for leaving a mortgage before the end of the deal period. Beware of these when entering your new mortgage as well. For some deals the penalties extend beyond the original discount/fixed period. Other leaving costs include admin or legal costs. Always ask about these when receiving a quote from a new lender.

  Beware of fees from your new lender. This usually means an arrangement fee. These are often a few hundred pounds but can be up to 1,000 in some cases. It may be better in some cases to pick a new mortgage at a higher interest rate with zero fees. Add up all your costs and benefits to ensure you get the best deal. Equally, a new mortgage with no fee could be a worse deal if you have to pay back more money. Remortgaging could also involve legal fees. Look for remortgage deals with free legal services.

  Broker fees can be up to one per cent of the value of the mortgage on a standard loan. If you do use a broker make sure they are fee-free. Ensure any fees to the broker do not come out of your pocket. Remember it has never been easier to arrange a mortgage yourself than today. Theres nothing to stop you handling a remortgage by yourself.

  Check the best offer charts tables in the media and remember some of the best deals may be only available for a few weeks.

• It All Sounds Too Good To Be True, Should I Go Ahead?

  Remember, at all times, this is a big financial decision and ultimately if you fail to repay your mortgage repayments then you could lose your home. Remortgaging your home is not to be taken lightly and you should think very carefully about your requirements and weight up the costs in detail. Consider very carefully all the expenses incurred by any possible switch. Discuss with an independent financial advisor if necessary. Approach any deal with extreme caution. Do not rush into anything. Compare total repayment amounts on each deal you are considering, interest rates, monthly repayments, and all extra costs involved. But if you are careful in your assessment of the benefits of a new mortgage deal then there is no reason why you cant save a lot of money. A new mortgage can always be arranged for a 2 or 3 year period if necessary then you can always switch again. Remortgaging can be a fantastic way of releasing funds for increased expenditure on your home, consolidating your outgoings, including any other debts, or just simply saving you money to save or enabling you to pay off your mortgage earlier than with your current deal.