Remortgage
A lot of borrowers remortgage every few years to benefit from new rates and products to fit the changing circumstances in their life. They change their current mortgage for a new deal with their current lender or a new lender.
Remortgaging is good as you can benefit from new rates.
A remortgaging decision is something that should be handled with great care. If you are looking forward to getting better rates from a mortgage, the following are some steps that you know about:
Remortgaging Considerations
If you are thinking of going for a remortgaging, you need to contact our financial advisers that will evaluate your needs and the deals that are on ground before giving you sound advice on the best remortgage options for you.
Remortgaging will benefit you the following ways:
It will help you save money: If you stay on the same deal for the entire full term of your loan, you might miss opportunities to reduce the total amount of money that you will pay back. You could save a lot of money through a remortgage.
It is good for a change in lifestyle: If there is a change in your finances, a remortgage can be better for you. A remortgage could get you higher or lower monthly rates depending on what your new lifestyle can accommodate.
It will help you avoid moving homes: It might be more convenient and cheaper to change or add an extension to your current home than move to a new home. This can be paid for by a further advance or remortgaging.
It can help you raise money: You can raise money for some things through a remortgage. An increase in the value of your property means that your mortgage could be increased to pay for things like the tuition of your children, a wedding and other expenses. This way, you won’t need to borrow money separately.
It will help you consolidate your debts: Through remortgaging you can release some equity that you hold in your home and you can consolidate debts like credit cards and car loans. These other debts could incur higher interest rates than your mortgage. This will reduce monthly payments but you might pay more money on the long run so you should consider this carefully and you should seek for sound financial advice before deciding to go for it.
A remortgage is not easy if:
You just became self-employed:
Lenders need to be sure that you can repay any loan that you undertake. They will ask you for your likely future income. If you just became a self-employed person from an employee you will need more time to build a good record for your business before some lenders will consider you for a remortgage.
Your early repayment charges are high:
if you have taken out a discount mortgage or fixed rate mortgage recently, you might discover that the early repayment charges could be expensive and you might need to take your loan elsewhere in the early years. For some cases, the charges can be more the savings that one gets from switching to the new mortgage.
You want a small loan:
A lot of remortgage applications won’t be considered if the loan is below a minimum amount. Small mortgage loans may also have some fees that might be more than the small savings that the remortgage offers.
You need to borrow a large percentage
of the property’s value:
A larger down payment will likely get you access to better rates. If you don’t own up to 5 or 10% of your property, it may be difficult to access competitive rates.
The Costs of a Remortgage
The major costs you will pay when going for a remortgage are:
Legal fees
- You will pay for hiring a solicitor to prepare the deeds and carry out conveyancing.
- The average cost is £500 – £1,500 plus VAT
Valuation fees
- You will pay a valuation fee which is the cost of hiring a surveyor to evaluate the worth and condition of a property.
- The average cost is £150 – £1,500 depending on how valuable the property is.
Higher lender charge
- If the mortgage that is being taken out is a considerable percentage of the value of the property (more than 90%), the lenders might charge you some money to insure themselves if you default.
- The average cost of this is 1.5% of a mortgage
Early repayment charges
- When you leave your mortgage before it comes to term, you will need to pay a penalty called early repayment charges. Your lender will advise you on any ERC that is applicable.
- The average cost is 1-5% of the mortgage.
Booking fees
- You will need to pay a one-time application fee for the mortgage, booking or reserving the capital while your request is processing.
- The average cost is £99 – £250
Lender’s arrangement fee
- This is the administrative cost of organizing a mortgage. This fee could be a percentage or a flat fee. Your lender will be able to advise you on any arrangement fee that is applicable to your mortgage.
- The average cost of this is £0 – £2,000+
THE PROCESS OF A REMORTGAGE ARE AS FOLLOWS:
You select a new mortgage
You must consider all the costs that is involved especially any repayment charges that might need to be paid. This way you can see if the deal will favor you or not. We will help you find a product that is suitable for you.
A valuation will take place
There will be another valuation of your property by a surveyor. The surveyor will evaluate your property for any damage or change in condition. After the valuation, an offer will be made. A solicitor will conduct local searches and send a title and report to the lender.
You make an application
The application process is the same as when you buy a new property. The lender has to underwrite the application. The lender will need information on your financial situation and how the loan can be maintained.
You settle iN
The last step involves the solicitor ensuring that your former lender is paid when the new lender releases the new mortgage funds. Before or after completion, the solicitor will release any additional funds you are borrowing.
