What is remortgaging?
A mortgage should not be viewed as a one-time purchase but as an ongoing financial arrangement that needs regular attention. The terms of your mortgage deal may only stay in place for a few years and after this they could change. To ensure you’re not paying more on monthly repayments than you have to and that you’re getting the right deal, it is important to seek out new mortgage deals every few years. This is called a remortgage; you take out a new mortgage on a property you own, either to replace your existing mortgage or to borrow money against your property.
A full mortgage term usually lasts around 20 -25 years; however, a typical mortgage deal normally lasts between 2 – 5 years (some lenders do offer more). Therefore, you may have a number of different mortgage deals over the course of your mortgage.
Reasons for remortgaging property
Your current deal is about to end
When your mortgage deal comes to an end, your lender will place you on their standard variable rate (SVR). This may be higher than your old interest rate and it may rise unpredictably. It is best to start looking around 14 weeks before your rate ends, as there could be a cheaper and better one available to you.
You want a better rate
If you are tied into an existing deal but want to move onto another, this requires some thought before proceeding. Often there will be an early repayment charge, which could be 2-5% of your outstanding loan and there might be a small exit fee when you repay any mortgage.
You want a more flexible mortgage
Perhaps you want a deal that lets you miss payments or make excess payments, as your income may have changed, or you’ve inherited some money. If your current deal doesn’t offer this flexibility, another might be more suitable for you. A remortgage could reduce your loan amount and you could potentially get a cheaper rate too.
You want to switch to a different type of mortgage
It is good to look around at the different types of mortgage, such as a fixed, capped or tracker. Switching to a mortgage with the right type of interest rate can save you money and ensure that you can afford it. You might also want to remortgage to move to a new fixed-rate deal for security of an interest rate rise.
You want to borrow money against your property
Remortgaging might be an option if you’re looking to borrow money but your current lender has refused, or their terms aren’t satisfactory. If you remortgage with a new lender you could raise money cheaply on low rates. However, remember to take all the fees into account to see if it really is cheaper than other forms of borrowing.
Your home’s value has risen
It might be worth doing your sums if your property has risen in value since you took out your mortgage. You could be eligible for lower rates, if you find that you’re in a lower loan-to-value band.
Get help remortgaging
We can help you in your decision to remortgage. Our independent mortgage advisers can assess your current deal, take your financial situation into account and find the best deal from the whole of the market. They can make you aware of any unfavourable aspects of the deal, so you don’t get caught out later down the line. Remortgaging property at the right time to the best deal could save you a lot of money over your mortgage term.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED ON IT.