How Does Remortgaging Work?
If your current mortgage deal is coming to an end, you’ll need to know how remortgaging works and whether this is something you should do.
We explain remortgaging below as well as covering all the things you’ll need to think about before you remortgage so you can make a decision based on all the facts.
How Does Remortgaging Work?
You might want to remortgage because:
- Your fixed term mortgage deal is coming to an end
- You want to reduce your monthly mortgage payments
- You want some certainty over your monthly payments
- You want a more flexible mortgage
- You want to release equity in your property
Whatever your reason for remortgaging, you’ll need to get specialist advise before you take any action.
Get Advice from a Mortgage Advisor
Whatever your reasons for remortgaging, the most important thing to do is to get advice specialist advice from independent mortgage advisor. They can tell you if remortgaging is the right thing to do and can also look at products right across the market, rather than being tied to a particular lender, which can limit your options.
An independent mortgage advisor can find you the best remortgaging deals on offer and they’ll also take into account any penalty fees and arrangement fees into account when making their recommendations.
You can search the market yourself to see if you can find a good deal, but make sure you include all fees attached. These fees include penalties for early redemption from your current lender, mortgage arrangement fees and valuation fees from your new lender.
If you don’t factor in all these charges, you may find that what looked like a good deal actually isn’t and by then it may be too late.
Some mortgage advisors change a fee, but many other independent mortgage advisors simply get commission from the products they sell so won’t charge you a fee. Get recommendations from family or friends or check online, but make sure they are completely independent so they can offer you a view of the whole market.
You should always consider your ability to make the monthly payments on any mortgage, particularly if the interest rate rises. If you think you may not be in a position to afford the payments if there was a rate rise, you should consider a fixed rate mortgage which allows you to know how much you’ll be pay each month over a fixed period of time.
The cheapest mortgage option may not always be the best and getting advice from a mortgage advisor will help you to make that decision.
Speak to Your Current Lender
If you’ve found a new remortgaging deal, you may want to speak to your current lender to see if they want to keep your business and offer you the same terms. It’s worth a quick call to discuss the options with them.
Complete the Application
Once you’ve found the right mortgage you’ll need to complete the application. If you use a mortgage advisor, they will do this for you. They’ll also explain all the additional things that will happen throughout the application process.
This will include a credit check and the possibility of having to provide proof of earnings with payslips if you’re employed or accounts if you’re self-employed.
The new mortgage company may want to complete a valuation survey on your property to make sure it’s happy to lend on the property. If they want to do this, you will need to pay these costs.
Once this is completed and they want to offer you the mortgage, you’ll receive an official Mortgage Offer outlining all the terms and conditions.
Choose a Conveyancing Solicitor
You will need a Conveyancing Solicitor to complete the paperwork on your remortgage and this is usually because the lender requires it.
They may have their own Panel of Solicitors or you can choose your own. Simpson Millar, like most law firms are on the panels of most major mortgage lenders, but if you’re not sure just ask.
Your Conveyancing Solicitor will sort out the paperwork and transfer the funds for the remortgage.
Do I Need to Remortgage?
Once your current mortgage deal comes to end, if you do nothing you’ll be moved onto the lender’s Standard Variable Rate (SVR). This could be a better option for you particularly if your circumstances have changed and you may struggle to get through the remortgage process.
Discussing this option to stay on the SVR with a mortgage advisor will help you to clarify your options and help you decide if you do want to remortgage.
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