Remortgaging your property can be daunting, especially considering the numerous options and technicalities involved. However, with the right guidance, you can confidently navigate the process and make informed decisions about your financial future. This step-by-step guide will walk you through the key considerations and actions to take when remortgaging, helping you to unlock the best deal for your needs.
Before you consider remortgaging to release capital for whatever reason, you must have an idea of how much money you need to free up, any additional charges or rates, and that you can afford to pay the increased repayments.
Make sure you get the correct advice from a qualified financial expert who will check your credit score and check for any hidden costs that might be associated with your current mortgage or the new mortgage deal.
Make sure and talk with your current leader as they will be keen to keep your business and may be able to negotiate better rates to prevent you from leaving them.
If you decide to switch, you will need to complete an application with your new lender. This normally will require less supporting documentation than when you first bought a new home, but you will need your last three Payslips, along with your P60 and mortgage statement, as well as proof of ID.
The next step is to get all the necessary documentation to your new lender. You can do this by post, or in person or some lenders will let you submit your paperwork online.
Once the lender receives the application, they will run a credit check and carry out a valuation on the property – usually limited to an inspection of the exterior of the property – before making you an official offer.
At this stage, you need a solicitor to handle the legal aspects of the remortgage.
Once everything is in order, your new lender will pay the balance of your mortgage to the old lender and your property is then successfully remortgaged.
Remortgaging your home essentially involves switching from one mortgage to another. This may mean moving to a new mortgage offered by the same lender, or to one offered by a different lender.
Reducing the rate of repayments to a more affordable level when funds are tight Benefiting from a lower interest rate offer
Putting down a lump sum repayment that reduces the total burden of outstanding financial obligations.
While everyone’s reasons for remortgaging will be different, here are some perks to switching your mortgage deal:
If your current mortgage deal is coming to an end, the chances are you will be moved onto your mortgage lender’s expensive SVR.
A general rise in property prices at the time your home is revalued for a remortgage would achieve the same effect. Of course, a decline in house prices could have the opposite effect.
If you have a fixed-rate mortgage deal then the Bank of England base rate might not concern you right now.
This is because your interest will be fixed for many years (though if you’re coming to the end of your deal, think about remortgaging now).
If you have a variable-rate mortgage, you could be affected by rising interest rates. You might want to switch to a new mortgage deal to fix your rate so that your repayments are predictable.
This could also help you get a handle on your monthly outgoings, which have increased for most households over the past year.
If you didn’t remortgage or do a product transfer after your last deal came to an end, you will probably be paying your lender’s default rate.
This means you will be paying over the odds so it’s a good idea to shop around for a new deal with a cheaper rate. This might also include looking for a new product with your existing lender.
Opting for a fixed-rate mortgage could help you beat any future rate rises for the duration of your deal.
One of the most common reasons for remortgage is to borrow extra cash to fund home improvements that can increase the value of a property.
Lower interest rates on new deals can tempt homeowners to do this, particularly if they are a better proposition for lenders because they now own more equity in their property.
But to get a bigger home loan, you must prove you can afford it.
Whenever you consider new debt that is secured against your home, be aware that falling behind on payments could result in the loss of your home.
Remortgaging can be a smart financial move, but it’s crucial to understand the benefits before making a decision
But there are disadvantages too, such as:
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