What does remortgaging mean?
A remortgage is a process of repaying an existing mortgage with the proceeds of a new loan secured by the same property. Remortgaging can help you save money by lowering your monthly payments, getting a better interest rate, and shortening the time it takes to pay off your loan.
With a remortgage no second loan or home move is usually required, instead, it is simply the switching of a mortgage from one lender to another. There are many situations where you may want to remortgage your house, including paying off other loans and if you need to borrow more, as well as a number of other reasons.
Regardless of why you may want to remortgage, it is important to understand what the best practice is when starting your research into the market. Remortgaging can be a great way to reorganize your finances and as such, you will want to put your best foot forward.
What you SHOULD do
Research the market
One of the most important and first things you should do when deciding on whether to remortgage or not is to research the market. You will need time to do this, so discuss with your mortgage advisor options for remortgaging well in advance of the actual decision.
When looking into the market remember that the best loan may not necessarily be the one with the lowest payments and interest rates. Some may allow you to make payments quicker for example, which in the long term will save you money. The process of researching the market may also solidify your decision or make you realise that taking out a second mortgage is the better option.
Shopping around for the best remortgaging deal is not too dissimilar from shopping for any other kind of deal, whether it’s an electric supplier or car insurance. If you are working with a mortgage broker this process can be even easier but does need to be started early and with the knowledge of when would be the best time to begin.
Be prepared
This point should really go without saying but when you are going to make a decision as important to your finances, you should be as prepared as possible.
Ensure that all of your documentation, specifically ID, proof of address, proof of income and bank statements. Keeping all of this documentation in a safe place will save you a lot of hassle in the long run. Your credit will be checked when you are applying for a remortgage, so it is also important to keep your credit score on track.
What you SHOULDN’T do
Stick with a lender for convenience
For many sticking with a lender has little to do with favourable rates and retention deals, and much more to do with the simple fact that they believe that remortgaging will be too much of a headache. If you are working full time the last thing you want to think about is the specifics of the mortgaging market.
It may be however that it is strongly to your benefit to look into remortgaging.
Be incautious
Advertising and promotions can be very effective methods of convincing people to choose a specific mortgage product, but it may not be the best deal for you. Some lenders will use terms like ‘bad credit, no problem’ and other such terms to entice you. You need to avoid these lenders as they will likely have a host of unforeseen stipulations that will cause you a wealth of problems in the future.
As part of the preparation process when researching mortgages, don’t forget to be sure as to what your properties value is and how much you are willing to pay. These may seem obvious but for a first-time buyer, it is essential that you understand where you stand.
Forget about associated fees
One thing you need to keep in mind when looking into remortgaging is what kind of fees your current mortgage provider stipulates in their contract.
Many lenders will make you pay a terminating fee if you choose to leave during your fixed term period, and this will usually be a percentage of the time left on the contract. There are also very often additional fees attached to leaving a contract early or simply for administration charges.
There are also often legal fees attached to remortgaging, and while often your lender will provide you with a free legal service, this can be a slow process.
Conclusion
One of the most important things to remember when looking into remortgaging your home is to be clear about what your wants and needs are. Sometimes remortgaging can seem like a complex process, but very often it is the best idea in the long run. If you have questions and think you may need advice, we at Your Mortgage Group are here to help.
We have decades of experience in the field and are here to help you make the best possible decision based on your circumstances. We give impartial advice and we have veteran knowledge that can be invaluable when looking into the market for the best remortgaging deals. Contact us today if you would like to learn more about how we can help you with remortgaging.
