Whether you want to remortgage to bring your monthly costs down by moving to a better deal, raise additional funds or release equity in your home for another purpose, then remortgaging may be the solution for you.
This article is just a general guide, and our expert mortgage advisors at Try Financial offer personalised advice based on your individual situation. We will guide you through the different remortgaging options and find you a great deal that could potentially reduce your monthly repayments and mortgage term.
To find out more, please phone our mortgage helpline on 03300 553732.
What is a remortgage?
A remortgage is when you switch from one lender to another but stay in the same property, its usually common to remortgage when your current product deal has come to its end. Although most people do move to a new lender, it is possible your current lender may switch you to a new product via a product transfer.
Why should I remortgage?
There are a variety of reasons that people look to remortgage such as cutting your current costs to a more competitive rate or that you simply need to raise some additional funds, remortgaging can work for all for all kinds of purposes. If you remain on your lenders SVR (Standard Variable Rate) after your current fixed rate has ended, you could lose out on potential benefits.
We have listed some of the main reasons people choose to remortgage below.
Reducing your costs for a better rate
A remortgage can help you save money if your fixed rate or current product is about to end. You can save money by avoiding being switched to your lenders SVR, which is normally higher than their introductory rates and by changing lenders, you can take out a new deal.
You can also contact your current lender first given that they will want you to stay as a borrower with them and may offer you a better rate to choose from as an existing customer.
If your lender does not have any suitable deals available, contact Try Financial who will search the market for a better deal as they are a whole of market brokerage, with access to over 90 lenders.
To consolidate your debts
If you remortgage to consolidate your debts such as car loans and credit card balances, you can release the equity in your home and take out a new mortgage with a new lender for a higher amount, using this money to pay off your debts, consolidating them all into one new mortgage.
We do recommend that you think carefully before consolidating your debts in this way as a new mortgage could help you organise your funds, paying off what you own but at the expense of a longer period which you may end up paying more overall, even though they come with a lower interest rate.
It is important to seek expert advice from Try Financial before you commit to consolidating your debts. You will need to make sure you can keep up with the repayments, otherwise you are at risk of having your home repossessed.
Raise additional funds
If you want to raise additional funds by remortgaging to release equity from your property, the process is the same as a mortgage swap. If you borrow more money, most lenders will limit the LTV (Loan-to-Value) that they will offer depending on what you use the extra money for. This may affect the equity you will need to have to meet the lending criteria. You can use the additional funds for most things such as home improvements, a wedding or even your child’s university costs.
Specialist lenders may be able to offer you more money.
When can you remortgage?
When you initially take out a mortgage, you are offered an introductory deal, a reduced rate which is for a set period. These rates can vary in length and once they end, you are moved to the lenders SVR. The SVR that your lender moves you too is usually much higher than their introductory rates.
You can plan your next mortgage up to 6 months before your current rate is due to end and new mortgage offers typically take 3-4 weeks to process, with the legal work taking another 2-3 weeks.
A new offer is usually valid for up to 6 months, so if everything is already in place, you can instruct your solicitor to wait until your early repayment change period has expired before proceeding. A good idea would be to look at better rates before your current deal finishes, otherwise you could miss out and pay more than you need to as your lender will move you to their SVR.
How quick is it to remortgage?
A remortgage is usually much faster than getting your original mortgage. A typical remortgage can take between 4-6 weeks to complete from start to finish. If your application is straightforward, it may be quicker to complete.
If you have all your documentation ready beforehand, this can help speed up the process. Additionally searching for better rates before you plan to remortgage, is a good idea to ensure you get a great deal. An expert broker such as Try Financial might also be able to process your application faster, as they may have relationships with the lender which may make your application process quicker.
How does remortgaging work?
A remortgage is straightforward, and our process is usually as follows:
- You get a redemption statement from your current lender. This will show how much is outstanding on your current mortgage and any fees associated with repaying it.
- You get in touch with one of Try Financials expert advisors who will complete a factfind and request the documents required which will be passport, pay slips, bank statements, proof of address, tax calculations if self-employed to enable the advisor to research the whole of market to find a better solution that works for you
- If you are happy to proceed, our advisor will speak to the new lender and get a DIP (Decision in Principle)
- If your DIP is successful, your paperwork is processed, our mortgage advisor submits the application on your behalf.
- Once the lender approves your mortgage application and instructs a valuation report on your property, this may be a physical one or a desktop valuation.
- The solicitor acting on the remortgage will then request title deeds together with any lease that may be present and answer any additional questions that may need answering
- The solicitor arranges a completion date. This is when your solicitor will use the new money to clear the balance with your current lender and any additional funds left over are paid to you
How much does it cost to remortgage?
As with any mortgage, you will have various costs and fees when taking out a remortgage. Before you consider a remortgage, you could calculate how much it most cost to complete.
The costs you will need to consider could include:
- Arrangement fees, which are charged by your lender to establish your new mortgage, the amount will vary depending on the provider and mortgage deal you are applying for.
- Booking fees; are usually charged by some lenders on top of the arrangement fee and it is usually non-refunding and a one-off payment between £100 and £200. It is worth finding out if this applies for the deal you are interested in.
- Legal fees: are paid to your solicitor or conveyancer to sort out the legal side of your remortgage. (some lenders offer a fees free package for legals)
- Valuation fees: is paid when moving to a new lender as they will want a valuation of your property before agreeing to a remortgage to ensure your property market value is correct. (some lenders offer a free valuation)
- ERCs (Early Repayment Charges); is a fee that you pay when you want to exit your current mortgage deal before the end of term.
- Exit fees, which is known as a mortgage completion fee. This is an administration cost applied by the lender when you pay off your mortgage in full.
- Try Financials advisors will always explain all costs involved in remortgaging before they submit the application.
Who shouldn’t remortgage?
You may have the potential to save money through remortgaging, but it may not be the right solution for everyone. A few examples are listed below. If you fit into one or more of these descriptions then give us a call, we can help you figure out what your options are.
If you only need a very small loan
Some lenders may require you to take out a specific amount before they will approve your loan and, in some cases, the fees may reduce any savings you are likely to remake. In this case you may be better off taking a new deal with your existing lender.
You have a high early repayment charge
If you look at your contract, you may have a high ERC due to recently taking out a fixed rate or discount mortgage.
Your employment status has changed recently
As with any lender, they need assurance that you can repay your loan, and if your employment status has recently changed, this may show a risk for future income. An example of this would be if you recently switched from being employed to self-employed.
You have adverse credit or payment history problems
If you have had problems in the past with meeting payments or have adverse credit such as CCJ’s and bankruptcy, you may find that mainstream lenders will not give you a deal. You may in this case be better off staying with your current lender and taking a new product with them.
With all of the above areas Try Financials expert advisors may be able to offer another solution which is a secured loan also known as a second charge mortgage.
Assessing your options
You can compare mortgage rates in a variety of ways including comparison websites and speaking to a broker. We at Try Financial can find you the best deal from thousands of mortgage products available to us and recommend the most competitive rates to meet your individual circumstances.
Coronavirus (COVID-19) Scam
The coronavirus has been classified as a global emergency by the World Health Organisation (WHO). Unfortunately, criminals are now preying on people’s fear by launching various fraud and phishing campaigns.
Since February 2020, the National Fraud Intelligence Bureau (NFIB) has identified 105 reports of fraud where coronavirus or COVID-19 was mentioned, with victim losses totalling over £970,000.
The majority of reports are related to online shopping scams where people have ordered protective face masks, hand sanitiser and other products which have never arrived. One victim reported losing over £15K when they purchased face masks that were never delivered. Reporting numbers are expected to rise as the virus continues to spread across the world.
They have also received over 200 reports of coronavirus themed phishing emails attempting to trick people into opening malicious attachments or revealing sensitive personal and financial information. Some of the tactics being used in phishing emails include:
Some of the tactics being used in phishing emails include:
- Fraudsters purporting to be from a research group that mimic the Centre for Disease Control and Prevention (CDC) and World Health Organisation (WHO). They claim to provide the victim with a list of active infections in their area but to access this information the victim needs to either: click on a link which redirects them to a credential stealing page; or make a donation of support in the form of a payment into a Bitcoin account.
- Fraudsters providing articles about the virus outbreak with a link to a fake company website where victims are encouraged to click to subscribe to a daily newsletter for further updates.
- Fraudsters sending investment scheme and trading advice encouraging people to take advantage of the coronavirus downturn.
- Fraudsters purporting to be from HMRC offering a tax refund and directing victim to a fake website to harvest their personal and financial details. The emails often display the HMRC logo making it look reasonably genuine and convincing.
If you’re making a purchase from a company or person you don’t know or trust, carry out some research first and ask a friend or family member for advice before completing the purchase. Where possible, use a credit card to make the payment as most major credit card providers insure online purchases.
- Watch out for scam messages
- Don’t click on the links or attachments in suspicious emails, and never respond to unsolicited messages and calls that ask for your personal or financial details.
- Protect your devices from the latest threats
- Always install the latest software and app updates to protect your devices from the latest threats.
For more information on how to shop safely, please visit the Action Fraud website.
Mortgage payment holiday: how the three-month coronavirus payment break works
As a responsible broker, we would like to remind clients and anyone else that has a mortgage, you are still required to pay unless you have applied for a mortgage payment holiday.
We have spoken to several clients in the past few days, asking if they need to continue making payments on their mortgage and credit cards and would just like to give an explanation on how to ensure you are covered during these hard times.
Whilst credit cards are completely different from mortgages, you still need to ensure you make your payments, even if minimal amounts on your credit cards.
When it comes to your mortgage, things are a little different:
- You are required to continue making payments on your mortgage.
- If you are affected by the COVID-19 outbreak, you can get in touch with your bank or mortgage provider to discuss a payment holiday.
- You may not be suited to a payment holiday however your lender will confirm with you your options by looking at your current financial situation.
- Failing to maintain payments on your mortgage will put a missed payment on your credit file.
- Payments are deferred ONLY if you qualify for a payment holiday and you will have to continue to make these payments after the government set guideline on suspending them. You may be asked to spread these payments over the remainder of your current mortgage term.
What if I don’t own my property but rent?
The government is set to discuss and vote for a new legislation which should come into effect within the next week so that people unable to pay their rent, can receive help. Until then, we urge you to contact your landlord if you are struggling to make payments whilst out of work and inform them of this.
The government have put measures in place to stop you being evicted during this time however, landlords are also human and some rely on your payments, the best thing you can do is to discuss the situation with them until there is more information available in the coming week.
We would recommend renters to contact their landlord or managing agent if they have problems paying your rent. If you are a landlord and your tenants are unable to pay their rent you should contact your lender as soon as possible to discuss the options that may be open to you.
How do I request a mortgage payment holiday?
We urge you to contact your lender as soon as possible, they will be able to assess your finances and provide you with options best suited to your current financial situation.
If you are in doubt, we are on hand to give you some general guidance but your lender will be able to access your financial situation as you are making repayments to them and advise you better.
Accessing business help during COVID-19 outbreak
The government has issued a guideline on accessing help for your business if you have been affected during the Covid-19 outbreak.
On 17 March, the Chancellor announced an unprecedented package of government-backed and guaranteed loans to support businesses, making available an initial £330bn of guarantees – equivalent to 15% of GDP.
This was on top of a series of measures announced at Budget 2020, the government announced £30 billion of additional support for public services, individuals and businesses experiencing financial difficulties because of COVID-19, including a new £5 billion COVID-19 Response Fund, to provide any extra resources needed by the NHS and other public services to tackle the virus.
The government will take new legal powers in the COVID-19 Bill, enabling it to offer whatever further financial support it thinks necessary to support businesses.
This document attached below sets out further information on how you or your business can access if you are experiencing financial difficulties because of COVID-19.
If you want the latest information on the government’s COVID-19 Action Plan you can go here: https://www.gov.uk/government/publications/coronavirus-action-plan
If you want more information about the situation in the UK, along with guidance for what to do if you think you’re at risk:
- Visit https://www.nhs.uk/conditions/coronavirus-covid-19/ for information about the virus and how to protect yourself.
- Use the NHS 111 online coronavirus service to check if you need medical help.
- Visit https://www.gov.uk/guidance/coronavirus-covid-19-information-for-the-public for more information.
What is a Mortgage in Principle?
If you are looking for a mortgage, then speaking to a mortgage broker can help you understand whether you are likely to get a mortgage or not.
A mortgage in principle, also known as an Agreement in Principle or a Decision in Principle, is an agreement from a mortgage lender stating that they will lend you a certain amount of money. When you have an initial consultation with a mortgage broker, they will ask for information such as;
- Address history
- Credit commitments
This will in turn allow them to conduct an initial check to see whether you can get a loan based on whether you can afford the amount you are looking to borrow, given the initial information you provided them. You will sometimes be declined if you provide incorrect information or have poor credit history.
A mortgage in principle does not guarantee that you will be successful when moving to the next stage and having a full mortgage application done, neither does it guarantee the amount you’ll be able to borrow as the mortgage broker will still need to underwrite your full mortgage application, receive and review relevant supporting documentation and organise a valuation on the property you want to buy.
Why Should I Get a Mortgage in Principle?
Whilst not compulsory, there are several benefits to having a mortgage in principle done beforehand. Given that you have taken the initial step to get a mortgage in principle, this will allow you to be aware of how much you can likely borrow and allow you to make realistic offers on properties.
In a property area where the market can move quickly, showing estate agents and vendors that you are serious about getting a mortgage by getting a mortgage in principle can be appealing, show that you are more serious about purchasing a property and that you can afford it.
Not only can this be useful for borrowers that are worried about meeting lenders’ criteria, going through these initial checks will give you an early indication on whether you’re likely to be accepted and how much you’ll be able to borrow. If you are rejected, it can also give you a chance to reassess your financial situation and fix any possible issues.
How Do I Get a Mortgage in Principle?
When applying for a mortgage in principle, your lender or adviser will ask for:
- Personal details such as name, date or birth and address
- Address history from the past 3 years
- Information about your income
- Information about your expenditure and existing credit agreements
Please be aware that when you go through the process of obtaining a mortgage in principle, it can involve an advisor or lender doing either a soft or hard credit check. A soft credit check will not be visible to other lenders so it shouldn’t impact your credit profile but a hard credit check is visible to anyone doing a search. Too many hard credit checks can have an adverse effect on your overall credit score and if you already have a bad credit profile, this will likely have a negative impact on mortgage deals available to you.
What If I’m Rejected?
There are many reasons for why your mortgage in principle could be rejected. Some reasons include:
- You have a poor credit history
- You’re not on the electoral register
- You’ve not been employed long enough
- You don’t have a long enough address history
- You don’t meet the lender-specific criteria
Bear in mind that, even if you are rejected when assessing you for a mortgage in principle, this could sometimes be fixed by making a few adjustments to your credit profile and other means to improve your chances of being accepted.
Try Financial also has access to a panel of lenders that do not credit score, we may be able to help you even with bad credit and can assess all options available to you even if you are rejected.
Please note that these websites may have additional paid products and if you sign up to any trials, be sure to cancel before you are billed if you do not want to continue using their services. Try Financial are not endorsed by these businesses and only recommends using them to see your free credit score.
How Long Does a Mortgage in Principle Last?
Typically, a mortgage in principle is valid for up to 90 days. If it happens to expire before you need it, you can request another but remember that too many credit searches could end up damaging your credit profile.
For any further information on a mortgage in principle, or to speak with an expert regarding any stage of the mortgage process, please call 01473 462288 or send an email to firstname.lastname@example.org.
Tips to budget and boost your mortgage chances in 2020
At Try Financial we know how daunting it can be when it’s time to apply for a mortgage or being overwhelmed when beginning your journey, which is why we’ve put together some tips to help your chances of being accepted.
Here, we reveal our tried and tested tips of improving your chances of getting a mortgage as we look to improve your credit score, budget your money better and make your dream of getting on the property ladder, a reality in 2020.
Improving your credit rating
We believe the first step to ensuring you have a better chance to boost your mortgage chances you should be to look at your credit score, making improvements and ensuring you do not have any incorrect information on your credit file.
Get on the electoral role
One of the main things that credit agencies do when looking at your credit rating, is to confirm your address. Not only can being on the electoral role improve your credit score, but it also shows that your information is correct when compared to what you have provided
Ensure that this is kept up to date regularly and if you move, make sure to revisit this information.
Here is a link for more information and to register for the electoral role.
Check your credit file
There are three main agencies in the UK that hold credit files on you – Equifax, Experian and TransUnion – which can all hold slightly different information meaning that it is important you check with all three agencies.
If your credit score is not great, these services will give you a heads up on how you can take steps to improve your credit score and also upon your review, you can take the time to ensure all the information on them is accurate.
It may seem like a small typo such as an incorrectly spelled address will not do much harm, but when applying for a mortgage, this can have a great impact on your credit score. You can also have the same headache with a payment, for example, if you know you had paid a payment on time but this does not correlate correctly on your credit score, you can have this adjusted which will improve your credit file.
You can adjust these through these credit file services and they usually have detailed guides for fixing them but these may take time to apply the update to your credit file, so its best to check regularly.
Pay bills by direct debit
We recommend that you setup a direct debit to help pay your bills with at least the minimum balance on things such as your credit card each month. This will ensure you do not miss any payments and helps mortgage lenders decide whether to give you finance or not by showing them that you are able to keep on top of payments and are sensible with your money, and that you can pay on time.
What about your employment situation?
If you are in a permanent job with a stable income, this will help improve your chances of getting a mortgage with mortgage lenders as it shows you will have the funds to make repayments each month.
We also know that you may be worried about being self-employed, as your income can show payments all over the place, but you will still be able to get mortgage deals providing you are able to provide one years full accounts.
Improve your credit score with a credit card and rent payments
You can likely improve your credit score by getting a credit card and making at least the minimum payment each month, although we would recommend the full balance if possible. This will prove to mortgage lenders that you are responsible with your finances and can make payments on time.
Note: Not everyone will be able to get a credit card, and in some cases, this may not be the best solution. We recommend you use a free soft check credit card checker, to not only find the right solution for you, but to ensure you are likely to be accepted beforehand.
If you are currently renting your home, you may also be able to use the free Rental Exchange Scheme to boost your credit score by paying your rent payments to CreditLadder, which will then pass it on to your landlord and make a report to Experian that you have made a payment.
If you are interested in pursuing this, we recommended discussing this with your landlord before trying it out.
Saving for a mortgage deposit
Work out how much you need to save
We feel that by having a savings goal in mind, planning this out and seeing where you are each month will have a greater benefit on not only your frame of mind, but also keep yourself on top of payments and savings.
You should first investigate how much properties in your area cost, and calculate from there how much you will need to save for a deposit. You will need at least 5% of the property price to be given a mortgage.
Cut back on bills and everyday spending
Taking charge of your monthly bills and expenditure each month will not only help you save for a mortgage, but leave you in an overall better position with money each month.
We recommend that you frequently check whether you could save on utility bills such as energy and broadband, seeing whether you could get a council tax discount if you live alone, or use an app such as Monzo which will help you see your spending habits with greater visibility and where you could cut back on costs.
Start earning cashback and cutting your costs
If you are an online shopper, we recommend cashback sites to help find better deals and give you a percentage back on your spending. We recommend cashback sites such as Quidco and Topcashback when you shop online.
You may feel this is not much, but if you frequently make purchases online, this could save you a lot of money in the long run.
Another great way to help with your spending costs would be to apply for a cashback credit card. Providing you can trust yourself to pay off the balance in full each month, they have an added benefit to helping you build your credit score, which is vital for when it comes to applying for a mortgage.
Preparing to apply for a mortgage
Research mortgage types
There are three main types of mortgages which are fixed-rate, tracker and discount deals.
We recommend that you take the time to research each mortgage type so that you have a better understanding of them when it comes time to start comparing mortgage deals.
A mortgage broker can also provide advice based on your circumstances and give you options or suggestions on the type of mortgage you are likely to get and which one you would be better off applying for.
Talk to a mortgage broker
Now, with the tips above and having done your own research, it’s time to contact a mortgage broker. A mortgage broker is someone who can look at your financial situation, and work with you to suggest a mortgage that is best recommended to your requirements and then apply on your behalf.
A mortgage broker can save you the headaches and a considerable amount of time, by providing you access to more deals that you would not be able to find by yourself. By choosing a company that has access to ‘whole-of-market’ deals, you will gain access to a wider range of mortgages on the market, than just a select few.
This is where Try Financial can help and really shine for you as we also have access to lenders exclusive mortgage products which a lot of other companies do not have access to.
We work with the customer to put their needs first, ensuring not only the best possible mortgage, but can help them from start to finish.
Give us a call today on 01473 462288 or email email@example.com if you would like to discuss your options and see how we can help boost your mortgage chances. Our friendly and fully qualified mortgage brokers are waiting for your call.
Credit Repair: A Guide to Fixing your Credit
It is not unusual to have a blip on your credit file with us having mobiles and various other credit commitments, but a missed or late payment can have impact on your ability to get the mortgage you require with many lenders only looking for the perfect credit profile.
However, there are lenders that will look sympathetically at those blips and assess you on your current ability to repay the mortgage rather than your past credit history.