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Your mortgage could be costing you thousands of pounds over the course of your loan term. The mortgage market today is competitive, with plenty of lenders offering great deals to all types of borrowers. If you decide to remortgage you could end up with a cheaper deal which covers what you need.
Remortgaging is the act of switching mortgages. This can be by moving your loan to a new lender, or just by changing the type of loan you have with your existing lender.
Usually, remortgaging is done to get a lower rate or a loan suitable for a major project such as a property renovation.
It’s usually done by switching to a lender that offers a better interest rate or features such as payment holidays that might better suit your situation.
There’s a range of reasons why you might want to part company with your existing lender or deal and look for a new one.
Here are some scenarios where remortgaging tends to be a good idea.
If you’re dealing with any of these situations, you may want to think twice about remortgaging.
Whilst remortgaging has the potential to save you money, there are a number of fees involved that are worth considering before you begin the application process.
The best remortgaging deal is one that suits your mortgage needs while not raising your expenses. Ideally, a good remortgaging deal will lower your ongoing expenses and periodic repayments by offering a lower interest rate and more suitable features.
Before doing your research, you should ask yourself the following:
The remortgaging process takes typically between 8 and 12 weeks from the start of the process and the date you’d like your new deal to start.
Remortgaging might not be as complicated as when you first bought a house, but it could still take a couple of months.
This will give you plenty of time for the professionals you work with to complete their parts of the transaction.
If you choose to remortgage with your existing lender, the process should be completed much faster with fewer complications.
However, there’s no guarantee your existing lender will offer you the best deal, so it’s worth shopping around. After all, the difference between the best remortgage deal and a mediocre one could run into thousands of pounds over the rest of your mortgage term.
To give you a clearer example of the costs above, we’ve broken down an example estimate of the fees that you may face when remortgaging. Note that these fees can vary from one lender to another.
Expense type | Cost |
---|---|
Arrangement fee | £1,000-£2,000+ |
Booking fee | £100-£200 |
Valuation fee | £300-£400 |
Conveyancing fee | £300–£1,000 |
Broker fee | £300-£1,000+ |
Early repayment charge | 1-5% of the value of the early repayment |
Exit fee | £75-£300 |
Our experts have picked out the top 5 common mistakes people make when they are remortgaging and how you can try to avoid them during your remortgaging process.
The remortgaging process can take weeks or months depending on the market, the lender’s backlog or your situation. Not starting the process early enough or waiting for your current deal to expire could lead to you paying a lot more than you would if you planned ahead. Your current lender’s standard variable rate could be a lot higher than others on the market, if you give yourself enough time to compare or seek professional advice, you might be able to find a more competitive deal.
As a human, it’s natural to go with what you know – we’re creatures of habit. But when it comes to remortgaging, sticking with your current lender could be costing you. Make sure you compare the whole market before you make your decision. You might be eligible for a more favourable offer.
Even if you’re a sensible borrower, applying for credit before you remortgage isn’t the best idea. You might see an initial dip in your credit score and having a hard credit check on your report doesn’t look good to prospective lenders, as it looks like you need credit.
Remortgaging can be a complicated process. Not understanding or doing the right research before you start the process can add additional stress. For some, seeking professional advice from a mortgage broker or financial advisor is the way forward, for others using a comparison site like Finder is preferred.
Whatever works best for you, make sure you fully understand the product and criteria before applying. For example, some loans charge administrative fees, valuation costs or early repayment fees.
Using a broker? Make sure you ask how your broker is getting paid. Some brokers receive commissions (a “procuration fee”) or percentages of the products they recommend and others charge a fee. Make sure you do your research before you are presented with unexpected charges.
Remortgaging your first property to buy another could prove fruitful for your finances in the long run. Read our guide to discover how it works.
Knowing just how much equity you have in your home before you start looking to remortgage is crucial.
I would like to borrow against the investment property I currently own in London. The property is 100% paid with no existing mortgage against it. I am no longer living in the UK (I used to work for Vodafone). I am a USA citizen living in the US now.
Is my request possible?
Hi Hamid,
Thanks for getting in touch with finder. I hope all is well with you. :)
If you are planning to apply for a personal loan using your property as collateral, then this is possible. We do have a list of personal loans in the UK that you might want to check. However, since you are already in the US and you are no longer a citizen of the UK, you might have a limited option.
What I can suggest is for you to start asking big banks in the UK. Discuss with them your situation and they should be able to provide available options for you.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua