Remortgaging your property

Remortgaging involves switching to a new mortgage company or moving to a different deal with your current lender. If you’ve been with the same mortgage company for several years, it could save you hundreds of pounds a year. And we can help ensure it’s a straightforward process.

Why people remortgage

People usually remortgage to

  • save money by finding a lower interest rate
  • release money from their property known as ‘equity’
  • pay for home improvements such as a conservatory
  • obtain a deposit for a buy to let investment
  • pay off other debts

How it works

Many mortgage deals only last a few years. When they expire, they usually move onto the mortgage company’s standard variable rate (SVR). This is often higher than the previous rate. However, you don’t have to settle for the SVR, or even stay with the same mortgage company for the remainder of the whole mortgage term.

It’s also possible to leave your mortgage company within the fixed period. However, you should always check to see what penalties might be payable if you do.

Remortgage fees

Similar to buying a property, you may have to pay the following fees. However, the mortgage company will sometimes pay your legal fees to attract you to their product, which means it could cost you nothing.

Booking fee

You may have to pay a booking fee to reserve the mortgage which is generally £99 to £250.

Arrangement fee

The arrangement fee (charged to set up the mortgage) could be as much as £2,000. You can usually ask for it to be added to your mortgage, although that means you’ll pay interest on it.

Valuation fee

This pays for a survey of the property carried out on behalf of the mortgage lender. It checks that the property’s value is sufficient for the mortgage amount. The cost is usually between £150 and £1,500, depending on the value of the property and how detailed the survey is.

Whatever the costs, the savings almost always make it worthwhile.

Types of remortgage deals

Fixed rate mortgages

With a fixed rate, your monthly repayments remain the same for a specified period of time. So you know exactly how much your monthly payments will be. However, if interest rates fall, you may end up paying more than you would be elsewhere during that fixed period. These mortgages tend to run for two, three and five years, although they can be longer.

If you wish to repay the mortgage during this time, there might be repayment penalties. But you can often redeem the mortgage to move house without a penalty, provided you transfer the product to your new property.

Variable rate mortgages

The interest on a variable rate mortgage can change at any time. However with a capped rate, you can ensure it doesn’t exceed a certain amount to ensure your monthly payments are affordable. However, you will probably find that these rates are higher than the equivalent fixed rate.

Discounted mortgages

Discounted mortgages, which provide a discount off a specific interest rate, are also variable. This means your monthly payments could go up or down during the fixed period. However, unlike a capped rate mortgage, there is no limit to the amount by which they could increase. These types of deals may be cheaper initially, but repayments can increase significantly during the term of your deal, so tread carefully.

Tracker mortgages

Tracker mortgages are another type of variable rate mortgage which usually following the Bank of England base rate at a certain amount above or below it. The amount you need to repay decreases if the base rate drops. However, it increases if it rises, which can make planning difficult.

How to remortgage

  1. Check whether there are any redemption penalties if you move from your existing deal. If there are, the benefit of a lower interest rate is usually swallowed by the penalty.
  2. Find the best remortgage deal. Banks usually only offer their own products. However, an independent mortgage broker has access to a range of products to give you more chance of obtaining the best deal.
  3. Gather the type of information you needed when you first applied for a mortgage, for example, identification, up-to-date salary details, details of outgoings, etc.
  4. The new mortgage company will probably require a valuation of your property. This will be arranged for you. Once the valuation has been agreed, your solicitor will do the rest. The remortgage is usually complete in around six to eight weeks.

We can support you throughout the process. Contact us to obtain a free, no-obligation quote today. Get a quote