Written by 10:00 am Featured, Mortgages, Remortgage

Unraveling the Mysteries of Remortgaging: Your Comprehensive Guide

Understanding ‘Remortgage’:

Remortgaging demystified: it’s the process of securing a new mortgage on a property you already own and have an existing mortgage for.

Crucially, it differs from taking out a second mortgage. When you remortgage, you transition from your current mortgage to a new deal. The proceeds from your new mortgage settle your old one, using your property as security.

Essentially, it’s akin to shopping around for a better deal in the mortgage market.

Why Opt for Remortgaging?

For most individuals, their mortgage constitutes a significant financial commitment. Reducing this cost often results in substantial savings. While personal motivations vary, they generally fall into one of these categories:

  1. End of Fixed Rate: When the typical two-year fixed-rate mortgage term concludes, many revert to the lender’s higher standard variable rate (SVR). Remortgaging at this juncture for a better deal is advisable.
  2. Monthly Repayment Reduction: Seeking deals that lower monthly payments, often achieved by extending the mortgage term.
  3. Shortening Mortgage Term: Choosing to decrease the mortgage term for a faster path to mortgage-free status.
  4. Releasing Equity: If your home’s value has risen, remortgaging allows you to tap into the equity for various purposes, such as education expenses or home improvements. The funds can also be used to cover other debts due to the generally lower mortgage interest rates compared to alternatives like credit cards.

Ease of Remortgaging:

In most cases, remortgaging is a straightforward process. Once you identify the desired product, you apply with your broker. The process is simpler than the initial mortgage application, involving no contract exchanges and fewer searches.

Typically, it takes around 4-6 weeks.

Feasibility depends on the severity of credit issues and the Loan To Value (LTV) ratio. More severe credit problems and higher LTV may impact your chances of securing a better deal.

How Much Can You Remortgage For?

LTV plays a crucial role, with many lenders allowing remortgaging up to 90%. However, it might be challenging if there’s not much left to pay off, as some lenders may not entertain deals under £25,000.

Early Remortgaging Considerations:

The possibility of early remortgaging hinges on your existing mortgage deal. In many cases, you are legally required to have owned the property for six months before considering remortgaging. Additionally, early repayment charges may apply if you remortgage before your fixed-rate term concludes. Sometimes, waiting might be financially more viable if the savings from remortgaging don’t outweigh these charges.

How to remortgage

Around six months before your fixed rate comes to an end, you should start doing your research.

You can use our Beat Your Bank calculator to determine if there are deals out there that will allow you to save time and money on your current mortgage.

Navigating the landscape of remortgaging can be a rewarding financial move, but it’s crucial to understand the intricacies involved. For personalised advice or assistance, feel free to reach out to our experts at PropertyPal Mortgages and we’ll get the ball rolling for you. Call 028 9099 9999 or email mortgages@propertypal.com

(Visited 39 times, 1 visits today)

Last modified: 04/12/2023

Close