London Mortgage Solutions – Remortgaging
What is remortgaging?
Remortgaging is where your current mortgage is coming to the end of its fixed term, this could be 2, 3 or 5 years for example. After your fixed-rate finishes, you move onto a standard variable rate where the interest rates are not as favourable or fixed for a set period of time. With this, you may move from one lender to another due to the rate changes or fixed rates being offered.
A mortgage broker will look into ‘The Whole of Market’ to reassess what product fits your criteria and to establish the best-fixed rate for a select period of time.
When is it a good time to remortgage?
You can remortgage at any time, there is no defined point, but generally, a remortgage happens when a current fixed-rate period comes to the end, you want a better rate as there have been recent rate drops, your house value has risen which means you can move into a lower loan to value bracket or you simply wish to release some equity from your house’ value so you can complete that house extension, buy a new car or simply have some additional cash.
Another option is where you want to start overpaying your mortgage. Most lenders will allow this up but only up to 10% but some do have options of 25% or even unlimited amounts.
You might also be on an interest-only mortgage and you want to switch over to a repayment mortgage. This switch is happening more as people are now realising that they are needing to pay off their mortgage, not just the interest, so switching to a repayment mortgage is better for the long term
When is remortgaging not a good idea?
Remortgaging may not be a good idea if you have very little equity in your house, but then you can always transfer your mortgage which is another option. You also may have credit problems since you last took out your mortgage, this could be down to missed payments or CCJ’s from other lenders.
You might also find that your current mortgage has a very low-interest rate and that rates across the market are significantly higher so it might not be beneficial to remortgage as the standard variable rates are better than fixed.
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What remortgage options are available?
There are three remortgage options available, the first one being a product transfer. With this option, there isn’t any credit check as you’re simply moving your current mortgage to a new mortgage rate within the same provider.
The next option is to remortgage to a new lender, this process is very similar to taking out a new mortgage on your first house with the same checks, such as a credit check. You will potentially pay a fee but the rate and length could be better than your current provider can offer.
If you’re not able to move, want to change to a new lender and your fixed period is coming to an end, you will be placed onto an SVR (Standard Variable Rate), which could be worse as typically the interest rate you pay will be significantly higher.
I would always recommend the first two options as over a similar term you will be paying less and the same amount for a fixed period of time.
What fees are associated with a remortgage?
Fee’s associated with a remortgage vary depending on which route you go down. With most mortgages there are product fees, averagely these are £995 and come with lower interest rates. You can also remortgage with no product fees and the rate is higher, but it’s always worth comparing both to see what the overall cost would be as in some cases there isn’t a big difference between paying a product fee and not paying one.
How can a mortgage broker help if I need to remortgage?
With any mortgage broker, we should not put you on a standard variable rate as there are always good fixed rate deals out there. As a company, we have a customer management tool that alerts us six months before your mortgage is due to expire. You can remortgage from six months before your fixed-rate finishes and secure this rate, particularly if it is lower than what you’re currently at and if there are expected interest rate rises on the horizon.
We can also help in product transfer, so three months before your rate expires we can also transfer this for you to a new rate, similar to if you were to move lenders. Mortgage brokers are available throughout all the steps until you complete your purchase or start your new deal.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.