A remortgage is where you take out a new mortgage on a property you already own – either to replace your existing mortgage, or to borrow money against your property.
For most people, their mortgage is their biggest financial commitment. And it follows that streamlining the largest debt can produce the largest saving – sometimes £1,000s each year. The main reason that you might want to remortgage is to save money.
Many of the best mortgages only last a short time – often two to five years – the typical length of time offered on a fixed rate, tracker or discount mortgage.
When it comes to an end, your lender will put you on its bog standard variable rate (SVR). It’s likely to be higher than your old interest rate and higher than the best buys available. If so, you want to be ready to remortgage to a cheaper rate. Talk to us around 14 weeks before your rate ends.
If you are tied into an initial deal then you might have to pay an early repayment charge which can be huge, often 2-5% of your outstanding loan. Plus, there is usually a small exit fee (it might call it an ‘admin fee’ or a ‘deeds release fee’) when you repay any mortgage.
This doesn’t mean you shouldn’t consider it as the savings can be big (especially if you have a large amount of mortgage debt). We can look at the sums before you commit to anything.
If the value of your property has risen rapidly since you took out your mortgage, you may find you’re in a lower loan-to-value band, and therefore eligible for much lower rates. Again, we can do the sums but it’s definitely worth a look.
Perhaps your current lender has said no to lending you extra money or the terms it’s offering aren’t very good. All lenders have different affordability calculations so remortgaging to a new lender might enable you to raise money cheaply on low rates. But remember to take all the fees into account to see if it really is cheaper than other forms of borrowing.
If you are looking at borrowing more, the new lender will ask you what the extra money is for. Surprisingly, it is likely to be more comfortable with you borrowing the money for a new car than for business purposes. Not so surprisingly, it might not want to lend you money to start a new business. The most commonly acceptable reasons to raise money are for home improvements and paying off other debts. Just be prepared for your lender to ask for evidence if you are borrowing a large amount, e.g. builder quotes, or proof that you have paid off the debts.
Maybe you want to be able to miss a payment. Changing jobs, going back into education, going travelling – whatever the reason, there are mortgages which will let you take payment holidays.
Get A Remortgage Today
Whatever flexibility you want in a mortgage, chances are it’s out there.
If it sounds like remortgaging could be the right move for you, discuss your circumstances with us and we will find a lender for you.