Remortgages - What you need to know
If you’re thinking about remortgaging but you’re unsure whether or not it’s the right decision for you? We understand just how difficult it can be and so to help you make an informed decision, we’ve put together this handy guide.
Who Is Able To Remortgage And How Do They Work?
Similar to broadband or mobile phone deals, there is an opportunity to shop around and find a better deal. If you do find something that you feel is better suited to you, you can switch to a new deal and remortgage.
In comparison to standard mortgages, they’re often a little different when it comes to the reasons for applying and the application process itself. We’ll discuss these more below.
In What Circumstances Can You Remortgage?
There are a number of different reasons you may want to remortgage, including:
- Your current deal is about to end and you want to avoid being put on a Standard Variable Rate (SVR Rate).
- You want a better rate than the one you’re already on, given your circumstances have changed since your initial deal.
- The value of your house has gone up and you’re now eligible for lower rates.
- You’re worried about interest rates going up in the future.
- Your lender won’t allow you to overpay and you would like to find a lender that allows you to.
- You want to loan more money for home improvements.
How Do You Go About Arranging a Remortgage?
Usually, there are four steps to applying for a remortgage:
- The first thing you need to do is establish your loan-to-value. This means you need to add how much you want to borrow to the value you hold in your current property and any additional borrowing you need, as this will tell you what your house is worth.
- Once you know how much your house is worth, you need to check you meet the affordability criteria of any potential lenders. Each lender will have different lending rules and as a result, they will take different factors into account when it comes to your affordability. As an estimate, however, you can calculate your total income, minus your outgoings and times by 4.5. This should give you the maximum amount a lender may be willing to offer.
- Next, you need to think about the type of mortgage you want to borrow. Whether you want a fixed-rate mortgage or an interest-only mortgage, you need to think about what deal is going to be best for you.
- Using your loan-to-value, you can then search for any products with your potential lenders that you may be eligible for. Alternatively, you can get someone to do it on your behalf.
Can you remortgage with the same lender?
Although some people prefer to move to a new lender, moving to a better rate with the same lender is perfectly possible. Most lenders call it a product transfer, so if this is something you’re considering, that’s what you will need to ask for.
Do you need a deposit?
As you have equity in the home you already own, you don’t need to have a deposit to remortgage.
Will it affect your credit score?
A lot of people don’t realise that remortgaging is actually a great way to rebuild or improve your credit history as you can use it consolidate multiple debts and keep a better track on payments.
For more information when it comes to remortgaging, please do not hesitate to get in touch with a member of our team.
Commercial mortgages and some buy to let mortgages are not regulated by the Financial Conduct Authority
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.