Jamie Elvin talks us through remortgaging.
Finding the perfect remortgage deal can be just as challenging as arranging a standard purchase mortgage, especially if you’re unsure where to start. Whether you’re seeking to refinance for a more favourable interest rate, release equity for other investments, or have experienced a change in personal circumstances that could benefit from a remortgage, Strive Mortgages is here to assist you.
No matter how complex your situation may be, our team of expert brokers is ready to help. We have a proven track record of securing the best remortgage rates and facilities for our valued clients. With our extensive experience in this field, we thoroughly assess your situation, negotiate on your behalf with our trusted panel of lenders, and ensure you feel in control throughout the entire process, working towards achieving your desired outcome.
To discuss your remortgage needs in more detail, don’t hesitate to contact our team of experts today. We’re here to guide you every step of the way.
What is remortgaging and what options are available?
Remortgaging is essentially changing the terms of your current mortgage deal. There are many reasons that you might want to change your mortgage, from saving money and securing a better interest rate to releasing money for home improvements or debt consolidation. You can choose to either change lender or stick with the same provider – both are considered a remortgage.
When is it a good time to remortgage?
A good time to remortgage is when you can get a better deal than your current mortgage. This can happen for a number of reasons, such as a change in your financial circumstances, a change in the interest rate environment, or a change in the value of your property.
Some common reasons why people remortgage include:
The end of a fixed-rate period
If you have a fixed-rate mortgage, your interest rate may increase when the fixed period ends. Remortgaging to a new fixed-rate deal can help you secure a lower interest rate and protect against future interest rate increases.
If you have built up equity in your property, you may be able to release some of this equity through a remortgage. This can allow you to access funds for home improvements, debt consolidation, or other expenses.
Changing financial circumstances
If your income has increased or your expenses have decreased, you may be able to qualify for a better mortgage deal. Similarly, if your credit score has improved, you may be able to access lower interest rates.
If you want to change the terms of your mortgage, such as the length of the term or the type of mortgage product, remortgage can be an option.
It’s important to carefully consider the costs and benefits of remortgage and speak with a mortgage advisor or specialist lender to understand your options and find the best solution for your needs.
When is remortgaging not a good idea?
Remortgaging may not be a good idea in the following circumstances:
Early repayment charges
Some mortgage deals have early repayment charges that can make remortgaging costly. If you are currently in a fixed-rate or discounted mortgage deal, it’s important to check if there are any early repayment charges before remortgaging.
If the value of your property has fallen since you took out your current mortgage, you may find that you are in negative equity. This means that you owe more on your mortgage than your property is currently worth, and you may not be able to remortgage as a result.
If you have only owned your property for a short period of time, you may not have built up enough equity to remortgage. Similarly, if you have recently started contracting or are new to your industry, you may not have a track record that lenders are comfortable with.
Poor credit score
If your credit score has decreased since you took out your current mortgage, you may find that you are not able to access the best deals or may not be able to remortgage at all.
High fees and costs
Remortgaging can come with additional fees and costs, such as valuation fees, legal fees, and arrangement fees. If these fees outweigh the potential savings from remortgaging, it may not be a good idea.
Reasons for remortgaging
There are several reasons why someone may choose to remortgage their home:
To get a better deal
If you are coming to the end of your fixed-term mortgage deal, you may want to remortgage to secure a better interest rate or lower monthly payments.
To release equity
If your home has increased in value since you bought it, you may be able to remortgage to release some of the equity in your property. This could be used to fund home improvements, pay off debts, or make a large purchase.
To consolidate debts
If you have several debts with high interest rates, you may be able to remortgage to consolidate them into one monthly payment with a lower interest rate.
To change the type of mortgage
If your financial situation has changed, you may want to remortgage to switch from an interest-only mortgage to a repayment mortgage or vice versa.
To raise funds for a deposit
If you are planning to buy a second property, you may be able to remortgage your current home to raise funds for a deposit.
Speak To an Expert
Whether you’ve just had an offer accepted on a property and you’re ready to go, or you’re simply wondering how much you need to save for a deposit, it’s never too soon to reach out.
Why remortgage at the end of a fixed-rate deal? What happens if I don’t renew?
At the end of a fixed-rate mortgage deal, the fixed interest rate that you have been paying will come to an end. Typically, the lender will automatically transfer you onto their standard variable rate (SVR) unless you choose to remortgage or switch to another deal with your current lender.
The SVR is the lender’s default interest rate, which can be higher than the fixed rate you were previously paying. This means that your monthly mortgage payments could increase once your fixed-rate deal ends. You may want to consider remortgaging to a new deal at this point to take advantage of lower interest rates and potentially lower your monthly payments. Alternatively, you could look for a new deal with your current lender, such as a tracker mortgage or discounted variable rate mortgage.
How do I improve my chances of getting a good remortgage?
There are several ways to improve your chances of getting a remortgage:
Improve your credit score
Lenders consider your credit score when deciding whether to approve your remortgage application. You can improve your credit score by paying bills on time, keeping your credit card balances low, and checking your credit report for errors.
Build up equity in your home
Lenders look at the loan-to-value ratio (LTV) when deciding whether to approve a remortgage application. You can increase your chances of approval by building up equity in your home, which means paying down your mortgage or waiting for your home to increase in value.
Show stable income
Lenders will want to see evidence of your income to ensure that you can afford the remortgage payments. As a contractor, you can improve your chances by showing a consistent income over a period of time and having contracts lined up for the future.
Use a mortgage broker
A mortgage broker can help you find the best remortgage deal for your circumstances and guide you through the application process. They can also help you understand the lender’s criteria and requirements.
Gather all the necessary documents and information, such as proof of income, bank statements, and details of your current mortgage. Being prepared can help speed up the application process and increase your chances of approval.
What fees are associated with a remortgage?
Remortgaging involves similar fees to a standard purchase mortgage, such as broker fees, mortgage arrangement fees and potentially legal and valuation fees as well.
At the moment, lots of lenders are trying to incentivise customers to join them by covering some of these fees. Lenders often cover legal costs and valuation fees, and the arrangement fee associated with the mortgage can be added in as well.
Do I have to switch providers when remortgaging?
You have the option to switch lenders or stay with your current lender when remortgaging. If you choose to stay with your current lender, this is known as a “product transfer” and is usually quicker and easier than switching to a new lender.
However, you may not always get the most favourable terms or interest rates with a product transfer, so it’s important to shop around and compare deals from different lenders before making a decision. A mortgage broker can help you compare deals and find the best remortgage option for your needs.
Do I have to switch providers when remortgaging?
Yes, it is possible to remortgage with bad credit, but it can be more challenging and may result in higher fees or interest rates. The level of adverse credit and how historic it is will dictate the options available. Lenders will generally take a more cautious approach to lending if you have a history of bad credit and may require a larger deposit or restrict the amount you can borrow.
However, there are specialist lenders who offer mortgages specifically for people with bad credit, and a mortgage broker can help you find these lenders and navigate the remortgaging process. It’s important to note that if you have bad credit, you may also be more limited in terms of the remortgage deals available to you.
How can a mortgage broker help if I need to remortgage?
A mortgage broker can help with a remortgage in several ways:
Finding the best deals
A mortgage broker can search the market to find the best remortgage deals for your circumstances. They have access to a wide range of lenders and can help you find a deal with lower interest rates, lower fees, or better terms than your current mortgage.
Understanding lender requirements
A mortgage broker can help you understand the lender’s criteria and requirements for a remortgage. They can advise you on the documents you need to provide and help you prepare a strong application.
Saving time and hassle
A mortgage broker can save you time and hassle by handling the application process on your behalf. They can liaise with lenders, submit your application, and provide updates on the progress of your application.
Providing expert advice
A mortgage broker can provide expert advice on remortgaging, such as whether it’s the right time to remortgage, what type of mortgage is best for your needs, and how to manage any early repayment charges on your current mortgage.
Helping with complex situations
If you have a complex financial situation, such as being self-employed or having a history of bad credit, a mortgage broker can help you find lenders who are more likely to approve your remortgage application.
Your home may be repossessed if you do not keep up with your mortgage repayments.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Think carefully before securing other debts against your home.