Remortgage Guide – all you need to know about moving your mortgage
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Remortgage Guide – all you need to know about moving your mortgage
Mortgage rates can change quickly and your personal circumstances will adjust over time so, every now and again, it’s worth checking whether your current deal is still right for you.
You have to consider the change carefully as there can be penalties or other features in your current deal you’d miss in a new one, but there can be benefits to moving.
This guide explains all you need to know about how to remortgage and what to look out for.
In this remortgage guide:
- Why remortgage in the first place?
- Is it a remortgage you need?
- What should you think carefully about when planning a remortgage?
- How can you prepare for a remortgage?
- Can you remortgage if you’re self-employed?
- What happens during a remortgage? What can you expect?
- Contact information
Why remortgage in the first place?
There are several benefits to changing your mortgage product without moving property. It’ll give you the opportunity to possibly:
- Reduce your monthly mortgage repayments
- Release equity from your property which you could, for example, use for a DIY or renovation project or deposit funds for a buy-to-let investment property
- Get a more flexible deal, e.g. one that can allow to you to make over-payments
When you talk to us about your plans we can help you define what’s most important and find a new mortgage deal to suit you.
Is it a remortgage you need?
There are a few other reasons you might need to change the specifics of your mortgage but it might not be a remortgage you need. For example:
- If you’re moving home but want to keep all the details of your current deal the same (this is where you would ‘port’ your existing mortgage to the new property)
- When you want to borrow more against the value of your home but at a better rate or deal than your current mortgage (if one is available) – this is called a ‘further advance’
- Should you want to switch mortgages but stay with your current lender – this is called a product transfer. If, after we’ve had a discussion about your plans and current situation, a product transfer with your current lender is the right option for you, we won’t charge you a fee to complete the product transfer for you.
What should you think carefully about when planning a remortgage?
- If you have a fixed rate deal and it is coming to an end, you will likely end up on your lender’s standard variable rate (SVR) once the fixed period has ended. This could well be much higher than your current rate and it might take a few weeks to arrange your new deal so it makes sense to act quickly if you’re nearing the end of a fixed rate.
Lock in your new rate early but don’t miss out on better offers
As a result of rapidly rising interest rates and continued high levels of inflation deepening the cost of living crisis, in June 2023, major UK lenders signed up to the Government’s new Mortgage Charter.
Alongside many measures aimed at protecting borrowers, one of the agreements made by the lenders was to allow customers to secure a new fixed rate as soon as their deal allows (usually up to six months before a fixed period ends) but if, as they get closer to their product’s maturity date, a new, lower rate became available, the lender would allow the customer to have that better offer.
We’ve been monitoring rates for clients since this charter was introduced. Once your new product is booked with the lender, you can call or email us every few weeks to ask for a scan of latest deals. We’ll run a quick check of the market to make sure you’re still moving the product which suits you best.
- If you have a variable rate deal* you may be worried about rising monthly costs. If you are concerned, you may find a fixed rate deal will give you peace of mind with fixed monthly costs. However, it might be worth weighing up the pros and cons of the costs of remortgaging, and note that fixing into a rate means you may not be able to benefit from reductions in the future.
- If your share of the property’s value has grown* because the price of your property has gone up, lenders may be able to offer you better terms. A lower loan-to-value (LTV) could help you to access a lower rate by remortgaging, but it’s worth considering your options as a whole.
- If you want to borrow more money, remortgaging by using the equity in your property can sometimes be a popular way to raise finances, however there may be cheaper ways to borrow.
- If you want more flexible features – your existing mortgage deal might have strict terms regarding overpayment and will prohibit you from paying more than the contracted monthly amount. If you’d like to repay more quickly, a remortgage could allow you to switch to a deal that allows a certain amount that you can overpay without incurring fees. Other features, you might want to look for include having the ability to apply for ‘payment holidays’ when cashflow is tight.
- *IMPORTANT – If you are currently in a deal that is not due to end and decide you wish to remortgage to another lender, there may be high early repayment charges to leave.
How can you prepare for a remortgage?
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- Refresh your memory on the details of your current mortgage so you know exactly where you stand:
- What rate are you paying?
- How much is the remaining balance?
- What are your monthly repayments?
- Do you think your property value has increased?
- Re-evaluate your finances:
- Is your family budget up to date? i.e. are you clear on what disposable income you have to allocate to mortgage payments? Can you afford a change in your monthly repayment?
- Better yet, can you reduce any monthly outgoings (like gym memberships, phone tariffs, TV and entertainment subscriptions, gambling expenses) – lenders assess your ability to afford repayments on a mortgage before they offer one – they’ll look closely at your regular outgoings
- Refresh your memory on the details of your current mortgage so you know exactly where you stand:
Can you remortgage if you’re self-employed?
The answer is yes, you can remortgage if you’re self-employed. Lenders’ affordability assessments will be different to a standard remortgage but so long as you can prove your income and prepare your finances as noted in the section above, there is no reason you can’t apply to remortgage.
We’ll make sure to send lenders all the documents that help persuade them that self-employed mortgage applicants can afford mortgage repayments. Even if you’re self-employed and have:
- only 1 year of accounts
- declining profits
- or use share of net profit rather than dividends
What happens during a remortgage? What can you expect?
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- Call us to discuss your situation:
- tell us about your current deal
- explain how your finances have changed
- share your goals and thoughts on what you want the remortgage to achieve
- Call us to discuss your situation:
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- We’ll research a comprehensive range of products on your behalf while we find the right solution for you
- As an impartial mortgage broker we aren’t tied to any lenders and have access to some deals not available on the high street
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- We’ll make a mortgage recommendation based on your objectives and situation
- The product details will be clearly explained and we’ll set out any fees due (don’t worry, you’ll only pay a fee if you choose to go ahead)
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- When you give us the green light to proceed, we’ll make the remortgage application on your behalf
- We’ll keep an eye on progress and ensure the lender and any other parties involved complete their jobs on time
Get in touch today
We hope this guide has been helpful and you now feel more prepared to remortgage. Contact our friendly team to talk more about your specific circumstances and what you’d like to achieve.
Call us on 0117 907 0818 or email contact@mortgage-style.co.uk
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
There may be a fee for mortgage advice