By remortgaging you are able to move from one lender to another while remaining in the same home. There are several ways this can benefit you, including reducing your mortgage payments, allowing you to borrow more money or allowing you to pay off your mortgage sooner.
If you’re considering remortgaging, it is important to think about what you wish to get from your new mortgage. It is also important to consider that moving your mortgage from your current provider may result in charges, such as an early repayment charge and exit fee.
Why is now a good time to remortgage?
Interest rates are currently on the rise after a recent cut in 2020. This suggests that now may be a good time to consider remortgaging. With the main advantage of remortgaing being able to save money on a cheaper deal, there will be financial benefits to doing so before interest rates rise further.
Why should you consider remortgaing?
When you first take out a mortgage it is likely you would have taken a special rate depending on what factors were important to you at the time. A special rate will usually have a short term, meaning when this special rate ends the interest rate will revert to the lender’s standard variable rate. This will usually be considerably higher than the original special rate depending on the Bank of England’s rate.
Many look to remortgage shortly before their special rate comes to an end. We suggest you start to look for a new special rate deal around 3 months prior to your special rate expiring, either from your existing lender or with a new dealer.
You may also wish to remortgage if you are looking to take some equity out of the property to help fund something else- such as home improvements, vehicle purchase, or debt consolidation. This is known as capital raising. In this situation your lender will want to reassess your liabilities and your income and whether your requirements fit their criteria. This is similar to when you first took out the mortgage. If you are looking to remortgage to gain extra money, you can either take a further advance from your current lender or raise capital with another lender.
Find out how much you could borrow with our maximum borrowing calculator.
Should you switch lenders?
In some cases remortgaging with the same lender will not incur any further costs, however, a new lender may offer a lower interest rate making it worthwhile considering, despite other costs involved. It is often worth consulting with an advisor on which deal is best. In many instances, it is often difficult at first glance to recognise which deal is best.
When you agree to a special rate with a lender they may put penalisations in place if you decide to leave earlier than the agreed period. This is an early repayment charge. In some instances you may find deals without any ERC’s however this is usually traded for a higher interest rate. If your current mortgage does have an early repayment charge it is important to consider this when deciding whether to remortgage with a different lender.
As independent mortgage advisers, we can offer you deals from across the whole of the market. We work with a range of lenders, high-street and challenger banks who will be able to lend to most clients, specialist finance lenders who may be required for more unusual financing needs and private banks for individuals looking for a mortgage for more than £500,000.
At Veracity Financial Planning work with our clients in Nottingham and the East Midlands to understand their unique circumstances and find bespoke solutions to get the best deals on the market.
If you are looking to remortgage and would like to discuss your mortgage with our experts, contact us today get in touch with one of our advisers.