Although mortgages are typically over a long term you do not have to stay with the same product for the entire period. This is especially true when you move onto a likely higher variable rate once your initial deal finishes. Remortgaging involves switching your mortgage loan from one lender and product to another.
Why would you remortgage?
- To obtain a better rate and lower your monthly payment. Alternatively, you could move to a lower rate but keep your monthly payment the same, allowing you to pay off your outstanding balance quicker. With interest rates so low at the minute this is one of the most popular reasons for refinancing.
- Switch to a product that better suits your needs. Perhaps you have more disposable income now compared with when you first took out your existing mortgage and your existing product doesn’t allow overpayments. Or your current mortgage could be on interest only and you want to start reducing the balance. Or you want to fix your monthly payments.
- To raise capital for a specific purpose. Maybe you are looking to carry out home improvements, you may want to buy an investment property or gift funds to a family member to help them onto the property ladder. Lenders will consider capital raising for a myriad of reasons just make sure it fits within your budget.
- Reduce your debt. By refinancing onto a lower rate and decreasing your monthly payment it may free up monthly income to put towards paying off credit cards or loans sooner. The other option is to pay off the debt by borrowing additional mortgage funds. Make sure you seek advice on whether this is the best solution however as although the mortgage rate will likely be lower than what you pay for your unsecured debt, the term of a mortgage is typically longer so you pay interest for a greater period.
What should you look out for?
- Fees. Speak to a mortgage broker so they can calculate whether the cost of switching your mortgage will make it worthwhile. Lenders may have a valuation or arrangement fee and there could be a legal or broker fee to pay. You also want to check with your existing lender that you are outside any early redemption penalty period for paying off your loan.
- The value of your property and the outstanding balance of your existing mortgage. These will affect the loan to value and hence the product offered by the new provider, so you will want to have a clear idea of what the property is worth. You may also want to check with your existing lender on the balance outstanding with them to ensure you raise sufficient funds to clear the loan.
- Just because you are a contractor, only have one years’ self-employed tax returns, have some adverse credit or you are worried about your age doesn’t automatically mean there isn’t a remortgage option out there for you. Whatever your circumstances make sure you speak with an independent whole mortgage broker well versed in specialist lending, so they can investigate the appropriate solutions for you.
OnPoint Mortgages a trading style of L&D Mortgages Ltd is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority.
0203 633 4940*
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE