Remortgaging

Your mortgage payment is likely to be the most significant bill you must pay each month. To make the most of your money, it is essential that you have the best value mortgage available.

If you already have a mortgage that is on a fixed term, it is normally best to stay with this. However, if your fixed term period has expired, it may be worth looking into alternatives.

As with all financial products, there are a lot of choices when it comes to looking for the best remortgaging deals.

By engaging with a specialist mortgage broker such as Elementary Mortgage solutions, you can quickly identify the most suitable options available to you and secure a great new deal.

Why Remortgage?

There are several reasons that you may want to look for a new mortgage:

  • The Fixed-term, low-interest period is ending
  • A change in financial income
  • The property value has increased
  • To change the payment type
  • To borrow more money
  • To save money

With so much choice in the mortgage market, it’s good to have an idea of what you want your monthly payments to be. For example, if you have started earning more money, can you increase your mortgage payments? A mortgage broker can talk through what your current mortgage provides and discuss options for remortgaging deals.

The Remortgage Process

Your starting point will be what you owe on your current mortgage and what your property value estimate is. If you discover your property value has decreased since taking out the existing mortgage, it may be worth remaining with your current mortgage provider.

Try and make sure your finances and credit score are as healthy as they can be. Aim to have any outstanding debts, if overdue, paid off. Make a record of all the other debt you owe as this will help plan your finances. This information is also required for the application process.

While checking your finances, calculate your income and outgoings to work out a target figure for mortgage repayments. Consider if can you make savings elsewhere in your life to pay off more of the mortgage each month?

If you have equity in your home, some of this could be released giving you a lump sum to use on a new car, an extension or a family holiday. For more details on capital raising mortgages, please see our blog post.

Remortgaging Deals to Choose From

The two primary types of mortgage to choose from are fixed and variable rate. A fixed-rate mortgage has an agreed interest rate that won’t change. This enables you to plan your future finances more accurately. The fixed rates typically last for between 2 and 10 years.

A variable rate mortgage has an interest rate that changes in line with the rate set by the Bank of England. This can be beneficial if the interest rate is low but can be a risk if interest rates increase. Example of variable rate mortgages are tracker or discounted.

Remortgage Costs and Fees

Depending on your circumstances, there are a number of fees that could be applicable in your remortgage process.

If your current mortgage has a fixed term, then you may have to pay an early repayment charge if you want to change lender within this period. Your current mortgage provider will be able to advise you on what time you have left on the fixed term and what the costs are, if any, for early repayment.

Some lenders charge a ‘deeds release’ fee or ‘admin’ fee to forward on the property title deeds to your solicitor. If a charge is applicable, this should be explained in your current mortgage paperwork.

Most lenders charge arrangement fees for setting up a mortgage. The charge will vary and can be anywhere between £0 and £2000. It is often possible to add the arrangement fee to the mortgage balance. However, if you do this, keep in mind that it will increase the money you ower and your monthly payments.

You may also be asked to pay a Booking Fee which is effectively a charge for applying for a mortgage. The booking fee is sometimes included in the arrangement fee and will cost between £100 and £250.

The new lender will generally want to check the value of the property that is being mortgaged. This is to confirm the property is worth the sum you wish to borrow. Some lenders will charge a valuation fee, whereas others will include it free of charge.

To ensure the remortgage process is completed correctly, legal work is required. For a remortgage with no ownership change, lenders will often include a free legal package. If you wish to amend the mortgage, for example; removing or adding a person, you may need to pay additional solicitor fees. These costs will vary depending on the complexity of the changes and the rates charged by the solicitor.

Find Out More

With so many options and potential fees to consider, it can be challenging to research the mortgage market on your own. Working with a mortgage broker will give you access to their expertise and knowledge. They will be able to provide you with the best remortgaging deals on the market, many of which won’t be available to the general public. They will also complete much of the paperwork on your behalf and make the process simpler and more straightforward.

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