Given it is such an important decision, with financial repercussions, it is crucial homeowners consider remortgage advice and costs before committing to a remortgage.
Many homeowners have found remortgaging to be a suitable solution to their problems, and that this act has enhanced their circumstances.
How does remortgaging work?
Remortgaging is the process of removing the mortgage you already hold on a property you own, to a new mortgage on the same property.
There are many reasons to remortgage. It might be possible to arrange a more affordable mortgage for your property, helping you save money. Alternatively, you might remortgage to borrow money against your property.
It is believed that around one-third of all home loans in the United Kingdom are remortgages*, so it is a common practice.
Why should I consider remortgaging?
While a homeowner should have clear reasons as to why remortgaging is suitable for them, there are common reasons which are cited time and time again. Some of the most common reasons people decide to remortgage include:
Mortgage initial rates are generally only available for a limited time, often between two and five years. Therefore, if your current mortgage deal is about to end, and you want to ensure you can maintain an affordable mortgage, remortgaging might be the solution.
Actionable remortgage advice
If you have reviewed your mortgage and the market, and you believe you can find a better rate, you should consider a remortgage.
If the value of your property has risen since you arranged the mortgage, you might find yourself in a more affordable loan-to-value band. If this occurs, you might find yourself eligible for more affordable mortgage rates, which means remortgaging is likely to be a sensible idea.
If you’re a landlord, due to the substantial increases in property prices in London in the last five years, you should definitely get an online rental valuation. This will make your lender recalculate your LTV, and a lower LTV means a better interest rate and a larger choice of lenders. Furthermore, If you are concerned about interest rates rising, and you wish to minimise your exposure to this, remortgaging is a sensible idea.
Your circumstances might have changed, which means you are in a position to pay more of your mortgage now. If your current mortgage doesn’t allow for this, a remortgage can help you find a more suitable solution.
How much does remortgaging cost?
The cost of remortgaging depends on many factors, including aspects solely related to the individual mortgage. The amount left on the existing mortgage, the current monthly payments, and personal circumstances influence the cost of the remortgage.
However, you must consider and budget for the following costs:
- An early repayment charge to your existing lender could cost up to 5% of your mortgage, so check your existing mortgage terms.
- A deeds release fee (or admin charge) to your current lender, which isn’t always applicable, but if it is, might cost up to £300.
- An arrangement fee, which is payable to your new lender, and could range from £0 to £1,000
- A property valuation fee, which is payable to your new lender, could be free or you may have to pay for this.
- A conveyancing fee could be free if using the lender’s appointed conveyancer or cost upwards of £400.
- A broker fee, if applicable, and this cost could range depending upon your circumstances.
You will also have your new mortgage payments to manage each month.
Can I remortgage with the same lender?
Some key benefits might lead you to remortgage with the same lender. Using the same lender for the remortgage process should save time. If you need money quickly, this is likely to be of benefit.
If you have a history with your current lender, they might be more willing to provide you with an affordable deal, which might help you save money.
Of course, it might be that another lender will help you save money. If this is the case, you aren’t duty-bound to be loyal to your existing lender.
However, be sure to check for exit fees. If there are costs associated with leaving your current lender and mortgage, this might negate the savings on offer from another lender.
When considering a remortgage it is advisable to speak with a broker who can look at the market as a whole and give you remortgage advice on what options are available.
How to explore your mortgage options with The Money Hub
Call the Money Hub Limited on 0203 725 5830 and speak to one of our highly specialised and dedicated Mortgage Advisors or you can complete an enquiry form which will allow you to schedule a call time.
DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.