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Looking to re-mortgage? It’s time to explore your options
Who can blame you? Once the initial promotional period of many mortgages has finished, you can find yourself paying more than you’d like for your mortgage. In today’s competitive market many borrowers choose to switch their mortgage periodically in order to take advantage of new rates on offer. Stay on the same deal for the full term of your mortgage and you could lose out on a range of potential new benefits, including reducing the total amount you have to pay back. In some cases this could be a significant amount.
How it works
Everything you need to know before exploring a new mortgage!
A re-mortgage involves switching your current mortgage to a new deal, arranged either with your existing lender or with a new one – usually with the aim of cutting your monthly repayments or to borrow additional funds.
Our step by step guide below is designed to help you along your way, with explanations of key terms provided in out glossary.
Why you should consider a re-mortgage
As a current homeowner you may want to think about a re-mortgage for a number of reasons:
• To save money
If you’re paying your lender’s Standard Variable Rate (SVR), then it is possible that you could reduce your monthly repayments by switching to a new promotional rate.
Even if you are on a promotional rate with another lender, if you have no tie in penalties and your current mortgage rate is higher than other mortgages available to you, you could save money by re-mortgaging.
• To raise money
A rise in your income or an increase in your property’s value means you could increase your mortgage to help pay for major expenditure like a car or wedding, rather than borrowing separately.
• To avoid moving home
It can be cheaper and more convenient to re-mortgage, freeing up funds to adapt or build an extension on your current home rather than move home.
• To consolidate your debts
Re-mortgaging can allow you to release some of the equity you hold in your home and consolidate your other debts, such as credit cards or maybe a car loan. Such loans can attract higher rates of interest than that of your mortgage.
When you should consider a re-mortgage
• If your current mortgage is higher than the mortgages available to you and you have no penalties to leave your existing mortgage.
• Even if you are on a promotional rate with another lender, if you have no tie in penalties and your current mortgage rate is higher than other mortgages available to you, you could save money by re-mortgaging.
• When your home has risen in value since you brought it. A re-mortgage can provide a cost effective way of borrowing larger sums of money at lower mortgage rates of interest.
Things to consider
Re-mortgaging can be straightforward, but before you go ahead you need to consider the following:
• If you’re locked into a fixed term deal with your present lender, you may be liable for an early repayment charge that could negate some of your potential savings. You could also be charged a mortgage closing fee by your lender.
• If you only have a small mortgage, then you might be better off staying with your current deal, as any savings could be cancelled out by the costs.
• When comparing your old mortgage with a proposed new one, make sure that you measure apples for apples. Compare a repayment mortgage with another repayment one rather than an interest only loan.
How long does it all take?
Because the title deeds are already in your name, the process is quicker than when buying from new. In fact, it can be taken care of in just a few weeks, assuming all the paperwork is correct and no unexpected problems arise along the way.
What are the costs involved?
The costs of a re-mortgage can be lower than when buying a property. In most cases the charges below either won’t apply or will be lower than when you first purchased your mortgage, including:
• Stamp duty – There is no stamp duty liability when re-mortgaging
• Legal fees – Solicitor’s costs should be lower as the legal process is simpler for re-mortgaging than purchasing.
• Homebuyer’s report or survey – Assuming you undertook a Homebuyer’s report or full structural survey when you purchased the property, it’s unlikely that you will need to arrange another.
• Other costs – other costs will apply (as below) but on some re-mortgage deals some lenders will meet some or all of these.
When considering a re-mortgage, bear in mind any early repayment charges that may apply on your present deal, and the extent to which (if at all) these would reduce the savings gained by re-mortgaging.
Many re-mortgaging costs are similar to those incurred when purchasing a property. These may include:
• Early repayment charges (applicable in some cases)
• Arrangement fees
• Booking fees
• Valuation fees
• Legal fees
• Higher Lender Charge (in some cases)
• Discharge fees from your old lender (often called a ‘selling fee).
We offer mortgages specifically designed to suit people from the whole market place and please contact us for your requirements.
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