A remortgage (also known as refinancing) is the process of paying off one mortgage with the proceeds from a new mortgage. There are various reasons you might want to consider remortgaging, below are some of the most common reasons - all of which will require some investigation on your part, some independent financial advice and number crunching to be sure that they are going to get you the result you want.
1. Your Current Deal Is About To End
If the last mortgage option you went for was a fixed term mortgage, the end of your fixed period may be looming. Rather than let your lender put you on a standard variable rate (SVR), which will most likely be higher than your previous rate, here is your chance:
2. You Can Get A Better Rate
You may find that there are better deals out there with lower interest rates which mean you can be repaying more of the core charge instead of constantly battling paying the interest and not even denting the mortgage.
3. Your Property Value
Another reason to remortgage is that your home's value has gone up... a lot. If you have made some major changes in your time at the property or the market has just fallen in your favour, you may find that you will be entitled to much lower rates.
4. Fears Of Interest Rates Going Up
You are worried about the Bank of England base rate going up - we live in a variable market at the moment and the SVR fluctuates accordingly, so searching for a lower interest rate fixed term mortgage might be a stable and secure option. However, if the SVR drops below the fixed rate you are locked into you will not be able to reap the benefits.
5. You Want To Overpay
If you are in this lucky position (maybe you have come into a windfall, whether inheritance or a pay rise, and you want the extra money to go towards paying off your mortgage) but your current deal either will not let you or it will only allow small over-payments, remortgaging will allow you to reduce the loan size, maybe getting a cheaper rate as a result.
6. You Want A More Flexible Mortgage
Whatever flexibility you are looking for in a mortgage, it is probably out there. However, lenders will not offer these extra, fiddly bits for free so you can expect to pay for flexible features with a higher interest rate. Do not be tempted to go for all the extras unless you are planning to actually use them.
With all early exit options, you must watch out for any early repayment charges or exit fees you may face, and compare this to how much you would save with the new, lower mortgage rate.
If You Are Using The Same Lender
Homeowners often mis-use the expression remortgage when they are simply switching from one product to another with the same Lender; this is not a remortgage and can be dealt with directly with the Lender.
If You Have Chosen A New Lender
Legal work is required to remove the original lender's interest from the property and register the new lender, therefore a solicitor will need to get involved. Most remortgages include a free legal package. However, the lender will select the solicitor and chances are the lender will be paying the bare minimum so you should not expect a high speed service. If you would prefer to have a faster, higher quality service then you can instruct your own solicitors but of course it will not be free.
If there is any additional work involved it will not be included in any free legal package, so you will need to get a quote from the solicitor anyway. If you don't tell your solicitor about any additional work upfront, it could cause delays later down the line when completing.
If you do require legal assistance when remortgaging, we have a dedicated residential property team with experienced, professional and approachable solicitors. We offer friendly and efficient advice and will be there to support you throughout the process. To get in contact, please call 01603 620508 or email us using our enquiry form at the top of our webpage.