When you first got your mortgage, you probably found a great deal. But these only last for a certain number of years.
To avoid paying the lender’s default rate you’ll need to make the decision to switch to a new deal. This could be with the same lender, or you could move your mortgage to a new provider.
This is called a remortgage.
What is remortgaging?
Remortgaging is essentially the process of refinancing your mortgage.
This means taking out a new loan to pay off your current mortgage, usually with a different lender. It can be a good choice for homeowners who want to take advantage of lower interest rates or switch to a more favourable mortgage deal.
When should you remortgage?
When it comes to remortgaging, there isn’t necessarily a “right” time to do it.
Some people opt to remortgage when their current mortgage deal expires, while others remortgage in order to take advantage of a better interest rate or an increase in their house value.
There are a number of factors to consider when deciding whether or not to remortgage, including your current financial situation and your future plans.
Remortgaging can be problematic if you have owned the property for less than six months.
Many of the well known lenders reject these applications. However, an independent mortgage broker will be able to investigate whether a day one remortgage could solve this problem.
In a separate article we answer the question ‘Who needs a day one remortgage?‘.
The process of remortgaging
The process of remortgaging your home can be relatively straightforward, but it’s important to know what to expect.
The first thing to do is check whether you will need to pay any early repayment fees, these are normally charged when you leave a fixed rate early.
If you decide to remortgage, you’ll need to shop around for a new mortgage deal that suits your needs. This can be done through a mortgage broker or by contacting different lenders directly. Once you’ve found a suitable deal, you’ll need to apply for the mortgage and go through the approval process.
You’ll need to provide some documents along with the remortgage application; proof of income, ID, bank statements etc.
For most people, the time taken for a remortgage to go through is 4-8 weeks.
The benefits of remortgaging
Remortgaging can offer a number of benefits for homeowners, including lower interest rates, a better interest rate type, and the ability to borrow more money.
Lower interest rates: One of the main reasons people remortgage is to take advantage of lower interest rates. If interest rates have dropped since you took out your current mortgage, you may be able to save money by remortgaging to a new loan with a lower rate.
Better interest rate type: Another benefit of remortgaging is the ability to switch to a more favourable interest rate type. For example, if you have a variable rate, you may be able to switch to a fixed-rate mortgage. This could help to protect you from future interest rate hikes.
The ability to borrow more money: This could be useful if you need to make home improvements or you can remortgage to pay off debt. You can also remortgage so that you can buy another property.
Release equity: Remortgage a house that you own outright to release equity.
Change repayment method: Switching to a new lender is the perfect time to change an interest only mortgage to a repayment.
Change borrowers: You can use a remortgage to add someone new to the mortgage.
Debt Consolidation Remortgage
Struggling with debt can be an emotionally and financially exhausting experience.
One potential solution is to consider a debt consolidation remortgage – a process where you consolidate debts into your main mortgage, reducing payments and freeing up cash.
Capital raising remortgages
Moving your mortgage to a new lender opens up quite a few opportunities to change how your loan is set up.
It’s also a very convenient way of tapping into the equity you have built up.
By applying for a larger (capital raising) loan than you have now, you can raise extra cash, that can be spent on almost anything.
You still have one lender, one monthly repayment, and all your borrowing is at the same interest rate.
Transfer of equity remortgage
There are times when you need to change who owns a property. Maybe a partner is leaving, or you have just got married and wish to add your new spouse to the property.
In these circumstances, the changes affect the property ownership and also the borrowers shown on the mortgage. In most cases these need to match.
A transfer of equity remortgage allows you to complete both tasks at the same time. It may also be possible to borrow more money or make other changes to the mortgage setup.
Visit our transfer of equity mortgage section for more information, including answers to questions such as Do I need a solicitor to buy out my partner? and How to buy someone out of a house.
You will find more useful information in our article: “Can you remortgage and add a name?“
CONTACT A REMORTGAGE EXPERT
If you wish to investigate your re-mortgage options we can put you in touch with a fully qualified whole of market mortgage broker.
Remortgaging with the same lender
Should you remortgage with the same lender?
It’s usually a good idea to look at your mortgage options each time the interest rate deal you are on starts to get close to ending.
Lenders will notify you of this at least 90 days in advance, so there’s plenty of time to decide.
Remortgaging with your current lender is easier and quicker than changing mortgage providers, and plenty of homeowners do it.
This is called a mortgage product transfer but is it always the right choice?
How to find the best remortgage deal for you
If you’re thinking of remortgaging your home, it’s important to compare different deals and offers before making a decision. You can use a remortgage mortgage broker to help you find the best deal for your circumstances, or you can compare deals yourself.
When comparing remortgage deals, there are a few things to look out for, including the interest rate, the term of the deal, and any mortgage fees or charges that may apply. It’s also important to consider how much money you’ll need to borrow and whether you’ll be able to afford the monthly repayments.
Ready to explore your options?
If you’re just about to start a new mortgage journey and could use the guiding hand of a professional, don’t hesitate to reach out to a reputable mortgage broker.
An independent mortgage broker can access over 100 lenders on your behalf. They will make the process smoother and more profitable than going it alone.
Keep reading, keep asking questions. The more you know, the better decisions you can make.
