What is a remortgage?
A remortgage is essentially where you transfer your mortgage from one lender to another. It does not involve moving house and is all done on your current home.
There are several different reasons you may remortgage, the main one being coming to the end of your existing mortgage deal. This is a good time to see if you can save money by switching to a new lender. It can potentially save you thousands of pounds over the lifetime of your mortgage and is important to get right.
There are 3 options you have at the end of your mortgage deal, these are:
- Do nothing and automatically roll onto the lenders standard variable rate. This rate that can change at any time and is often a higher rate.
- Check what deals your existing lender will offer you to stay with them, also known as a product transfer. This only gives you the options your existing lender is offering so is limited.
- Look at the option of remortgaging, which involves looking at the options available from all lenders to see who is offering the best deal.
Can I remortgage if I’m still in my current mortgage deal?
Yes, you can look to remortgage if you are still in your existing mortgage deal however you may have to pay an early exit fee, so it is not always financially beneficial.
When you are approaching the end of your existing deal, normally 3-6 months away from the end you can review and look to get a new deal arranged ready for when the current one ends.
Checking all the costs
When you are looking at the different deals available for your remortgage it is important to assess all the costs involved. The costs you may need to account for are lender product fees, valuation fees and solicitor costs.
Lender Product Fees
These fees are what the lender charges you for the product. The fee ranges from zero up to sometimes as high as £2000. You are mostly able to add these onto your mortgage so not payable upfront. You should however be aware this amount is added onto your existing debt and you will be charged interest on it.
A lender will want to complete a valuation to make sure the property is worth the value that has been declared. Some will charge you for the valuation and some will offer this free of charge. A standard valuation can cost anywhere from £100 up to around £600 depending on value of property.
If remortgaging to another lender you will need a solicitor to assist you with the transaction. This often costs less than when you buy a home but can still set you back a few hundred pounds.
Some lenders will offer free legal assistance when using their recommended solicitor, which helps keep upfront costs down.
You have to be careful and really check your numbers. A product may have a low interest rate but the upfront costs may high. Another deal might be a higher interest rate but low upfront costs making it cheaper overall.
Part of our service is finding the right deal for your circumstances taking into account all the associated costs and fees.
Getting ready for your remortgage
When applying for a remortgage a lender will request full details of income and expenditure as well as running a credit check.
Each lender has different criteria and affordability meaning lending can change from one lender to another.
The documents you are likely to need when apply for your remortgage are:
- Latest 3 months payslips or 13 weeks if paid weekly
- Latest 3 months bank statements
- Proof of ID
- Details of any financial commitments and debts
- Latest 3 years self-assessments if self-employed
This list is not exhaustive and you may need extra documents.
We can help you find the most appropriate deal that suits your circumstances. If your remortgage is coming up for renewal then get in touch as we would love to help.
Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.