When you enter into a mortgage, you typically sign a contract that ties you to it for several years – normally around 25 – but this doesn’t mean that you need to be stuck with the same product. Interest rates will go up and down, fixed terms run out and new deals are introduced. This makes it worth your while to look at remortgaging your house in order to get the most from your money.
Why Remortgage Your Home?
Remortgaging is a great way to get yourself a better deal on your mortgage, helping you to save yourself a fair bit of money in the long term. By remortgaging, you are essentially taking your existing mortgage and moving it to a different package with the same lender, or a different lender, in order to reap the rewards associated with a new mortgage.
There are many reasons why you may wish to remortgage your home, including to:
• Reduce your monthly payments
• Find better rates on a new deal
• Refix at the end of your existing deal
• Switch to fixed, variable or capped rate mortgages
• Change to a more flexible mortgage
• Release equity in your home
You aren’t tied down to your existing mortgage, so if you need to move in order to save yourself money then you shouldn’t feel worried about any repercussions. That said, leaving the contract early may mean that you have to pay an exit fee, but this shouldn’t put you off as you’ll be saving money in the long run.
How to Remortgage a House
Before you do anything else, you will want to check the market and what deals are out there. Sometimes your existing mortgage is the best one for your needs and can even be cheaper than some of the alternatives on the market. If it isn’t, then you will need to find out which lenders can offer you a better deal and whether you are likely to be accepted.
Next you will need to find out three things from your existing mortgage provider:
1. Do you need to pay an early mortgage repayment charge?
If you’re changing mortgage during an early repayment period then you may trigger this charge which is likely to be substantial. Find out if this applies to you and, if it does, how much it is.
2. Is there a fee for releasing the deeds to your solicitor?
Many mortgages have an admin fee associated with releasing your deeds to your solicitor. This amount can be anything from £50 to £200. You should be told this when you first take out the mortgage and it will be on the key facts document. If it isn’t, then ask for this fee to be removed.
3. How much do you owe your current lender?
How much you owe directly correlates to how much you need to remortgage for. Therefore, it is important to make sure that this figure is as accurate as possible so that you are able to seamlessly switch.
All this information will help to you make an accurate and informed decision regarding remortgaging.
Talk to Your Existing Lender
When you have another mortgage lined up and all the figures worked out, it is a good idea to approach your current lender with your new mortgage deal. They may be able to match the rates and terms in order to keep your business, many banks value their customers and will do whatever they can to try and keep them.
If your lender isn’t able to match these rates or offer you a better package that you’re happy with, then it is beneficial to tell them that you are planning to remortgage. This isn’t a necessary step, but it is often appreciated and can make the process smoother.
How Do I Apply for a New Mortgage?
This stage is relatively simple and just requires you filling out an application form to the new lender. They will then request a credit check from you and ask for additional documentation. Some lenders may also require a valuation of the property in order to assure that it is worth what you say it is.
The remortgage rates you are likely to receive will depend on the amount of equity that you have in your house. Generally, you will need to have at least 90% equity in order to facilitate the remortgage, although the more equity you have in your home the better deals you are likely to receive due to lowered risk.
Do I Need a Solicitor to Remortgage My Home?
Some people don’t realise this, but you may need a solicitor in order to remortgage your home. They will help to take care of all the legal paper work and ensure that both parties provide all the documents needed for a legal transaction.
Some lenders will offer to pay these legal fees for you, however this shouldn’t put you off remortgaging if they don't. Typically this fee will not be large and the long term savings that are a result of remortgaging should more than cover this cost.
We offer an award-winning remortgaging legal service, designed to help you remortgage your home as quickly and efficiently as possible. To find out more about our remortgaging conveyancing, please get in touch with our friendly and knowledgeable team.