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.