in Leamington Spa & Warwickshire
Remortgaging is the process of moving your mortgage from one lender to another. For instance, when your current deal ends with a specific bank, such as HSBC, and you opt for a more competitive mortgage arrangement with another, such as Santander.
However, remortgaging is not the only option available. You can also switch to a different mortgage product while remaining with the same bank. Instead of moving to Santander, you could secure a new deal with HSBC itself. This is commonly referred to as a 'product transfer'.
What options are available when remortgaging?
Your options vary according to your individual circumstances. Typically, you engage in a conversation either directly with the bank or through a broker to explore the options at hand. The suitability of available products will hinge on factors such as your income, expenses, credit history, remaining mortgage balance, and property valuation.
This is because, even if you're not seeking additional funds, transitioning your mortgage from one lender to another requires the new lender to evaluate your financial position. The new lender is responsible for ensuring that you meet their affordability and lending criteria.
Exploring your available options can be a complex task - which is where a broker's expertise comes into play. By gaining a clear understanding of your circumstances, we can recommend suitable lenders and products that align with these, presenting you with a competitive and suitable deal.
When is the right time to remortgage?
There are several reasons why people might remortgage, and we'll outline three of the most common ones below:
End of a current mortgage deal: A primary reason is when your existing mortgage arrangement is reaching its end – this is perhaps the most typical scenario prompting the search for a new mortgage deal.
2. Raise additional funds for home improvements: Another common motivation is to secure funds for home improvements or renovations.
3. Raise additional funds to purchase an investment property: Some people may wish to release some the equity from a property in order to invest in a buy to let property.
4. Debt consolidation: Some individuals opt for remortgaging to consolidate unsecured debts, such as credit cards and loans.
It's important that you seek guidance to determine whether the timing is favourable to remortgage, depending on your specific objectives. For instance, if you're considering raising funds for home improvements, we'll provide insights into the advantages and drawbacks of leaving your current mortgage arrangement. In certain cases, it might be best to remain with your existing lender and secure additional funds from them.
Given the multitude of variables at play, particularly as your current deal's expiration approaches, careful consideration is essential.
When is remortgaging a bad Idea?
Remortgaging isn’t always the best option… A professional adviser can guide you in assessing whether it is suitable or not.
If you are currently locked into a deal with a substantial early repayment penalty, remortgaging might not be financially feasible.
In instances where your property's value has significantly decreased, causing your mortgage balance to closely match the property's worth, finding a new lender might prove challenging.
Where you hold a relatively small mortgage and the potential decrease in monthly payments from a lower rate is marginal. In such cases, the remortgaging fees might outweigh potential savings.
A significant factor to consider is whether your circumstances have changed. For instance, if you have a mortgage with a mainstream bank but have encountered missed payments on your mortgage or other credit agreements, remortgaging could restrict you specialist lenders which may come with a higher interest rate and associated fees.
We establish your current position and subsequently provide tailored recommendations. This could potentially involve sticking with your current deal. If your intention is to borrow more, sticking with your current lender, even at a slightly higher rate, might be more favourable.
What happens if I don't remortgage at the end of my current deal?
At the end of your current deal, you'll move on to your lender's standard variable rate, which often results in higher monthly payments.
While many of us routinely assess our car insurance annually to secure the best deal, the magnitude here is far greater – we're addressing your mortgage, a substantial commitment and likely the most significant expense you'll have throughout your lifetime. Consequently, it holds paramount importance to explore your alternatives as your deal draws to a close. This might involve sticking with your current lender or remortgaging to a different one, depending on which one is more financially beneficial.
The primary reason behind remortgaging is to avoid unnecessary expenses, and additionally, it's a prudent move to avoid the volatility associated with variable rates. Such rates can fluctuate, causing uncertainty in your monthly mortgage payments, a prospect most people find unsettling. Generally, there's a preference for consistent monthly payments over a set period of time.
What steps can I take to improve my chances of a favourable remortgage?
The most important factor is to consistently pay your mortgage on time each month – set up direct debits for the appropriate dates to avoid and missed or late payments.
Begin the remortgage process early – typically around 4 to 6 months before the end date of your current arrangement. Also, ensure that you have all the necessary documents for your remortgage application. If you are not sure what is required, reach out to a mortgage adviser and they will be able to offer guidance. Collect these documents in advance and promptly submit them to the adviser handling your case.
Understandably, not every factor will be within your control. Changes in income or expenditure could complicate matters. However, focusing on elements you can influence is key. Implementing these measures will significantly improve your chances of securing a favourable remortgage.
Are any fees payable when remortgaging?
When discussing remortgaging, concerns about fees often come to the forefront of people’s minds. However, in most cases, the reality is less intimidating than originally thought. Remortgaging does involve a degree of legal work as you're moving from one lender to another, essentially altering the property's 'legal charge’.
Nonetheless, the legal work involved is usually minimal, and the positive news is that a significant portion of the legal expenses is often covered by cash back offers from most lenders, or they extend a 'free legals' service. This effectively takes care of these costs.
The vast majority (around 90%) of remortgages come with a free property valuation. This means you aren't required to pay for a valuation of your property. Depending on the specific product selected, there may also be some associated product fees. These fees can be added to the loan amount if necessary. Either way, these additional costs will be reflected in the overall cost of the mortgage over the product term, which will form part of the adviser’s recommendation.
Typically, these fees are linked to the benefits offered by a fixed-rate or a specific product. The remortgage market is highly competitive, and as a result, the majority of fees are often absorbed by the lenders.
Looking for remortgage advice in Leamington Spa & Warwickshire?
Jack Bewick offers tailored remortgage advice specialising across Warwick, Leamington Spa, Kenilworth, Stratford upon Avon, Coventry & Warwickshire, Lutterworth & Leicestershire areas.
Offering expert independent mortgage advice on:
First Time Buyer Mortgages
Home Mover Mortgages
Buy To Let Mortgages
Limited Company Mortgages
Affordable Housing Mortgages (Shared Ownership)
Self Employed Mortgages
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Some of the mortgage providers we work with...
Why work with Jack Bewick?
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"Jack was highly recommended to us when we started our house buying journey, and it was the easiest decision we made throughout the whole process. He was extremely helpful, knowledgeable and had a genuine desire to help us with all of our queries and was dedicated to getting us the best deal on the market at the time.
We couldn’t ask for a better Mortgage Adviser. Thank you Jack for everything you have done so far. We really appreciate your hard work and would absolutely recommend you to anyone looking to buy a house."