The benefits of remortgaging
Remortgaging is when you replace your current mortgage deal with another. This can be as simple as changing the terms of your existing mortgage with your current lender or it can mean changing lenders altogether.
The reasons that people tend to remortgage are varied, but common reasons are:
A lender is offering a better deal
To increase your loan amount to pay off your Help to Buy Loan
You have experienced a change of circumstances (such as a divorce or a bereavement)
You would like to release equity in the property
Very often, when you are remortgaging with the same lender, the process is very simple. Some lenders will give you a new deal without the involvement of a solicitor.
If you are switching lenders, however, the requirements are likely to be more complicated. The process will feel similar to when you first purchased the property. For example, the lender will require a valuation and searches.
Interest rates – Is now a good time to remortgage?
Banks are still releasing information as to how this impacts current and future mortgages. As solicitors, Attwells cannot offer financial advice. However, now is arguably a good time to obtain advice from a financial expert or mortgage broker to see if you can save money.
Lenders are starting to announce cheaper rates and deals, and these are expected to improve within the next few weeks especially as the market slows due to the impact of the Coronavirus. Therefore, considering a fixed-term mortgage is arguably wise as you can maintain your low-interest rate for longer. However, any savings will greatly depend on your own personal circumstances.
Early repayment charges – avoid the trap!
If you are thinking of re-mortgaging, do watch out for the “Early Repayment Charge” trap. It is extremely common for your existing lender to charge a considerable fee if you leave your mortgage before the expiry of the initial fixed-interest period. You should check your existing Mortgage Offer to ensure that you will not be caught by the early repayment charge and if you will, think very carefully about whether a remortgage is the right thing for you. If your reason for remortgaging is to release equity, there may be other financial products available to you (such as Second Charge Mortgages) that may be more suitable. However, you should always ask the advice of a properly qualified financial adviser before making your decision.