Solving the mystery of remortgages!
Hopefully, we can provide some clues to solving the remortgage mystery. Maybe your current fixed rate mortgage is about to switch to a standard variable rate, or you simply require a financial solution that is better suited to your current situation. remortgaging could be the best choice at your disposal, However, understanding the process and getting the best remortgaging deals can be a minefield.
When should I remortgage?
Remortgaging is far more commonplace than you imagine. In fact, 1 in 3 home loans is a remortgage agreement, so you are certainly not alone in considering a remortgage solution.
There are several situations in which you may wish to remortgage, but some of the most common are:
- To borrow more money for home improvements, paying debts, etc. when your current lender has said no.
- To overpay on your existing mortgage, bringing down the loan size to secure a cheaper rate.
- To take advantage of a lower (Loan to value) LTV ratio when the value of your property has dramatically increased.
- To get a better rate, especially when your current deal or fixed rate is due to end.
When shouldn't I remortgage?
Although appreciating the reasons for remortgaging is important, it is equally important to know when this option should be avoided. Otherwise, you could be opening the door to a costly mistake.
Here are some of the situations in which remortgaging is not the clever option:
- Your mortgage debt is small (under £50k) because the switch fees will cancel out any savings.
- Your early payment fees are large and will end up costing you a significant amount.
- Your property’s value has dropped, or you have very little equity in your property.
- You have experienced credit problems since taking out the mortgage, the rates offered will be worse.
Talk to us and we will give you an honest assessment of whether this is a good option for you or not.
How to find the best remortgaging deals?
The Financial Detectives could save you hundreds of pounds each year, by solving the mystery of finding you the right lender.
If you are planning to remortgage, it’s a good plan to take some positive steps before you make an application. Boosting your credit score and obtaining proof of increased earnings may help your rates and the ability to borrow more. One of the smartest things to do is get a lower (loan to value) LTV. If you think that the property valuation you’ve been given is too low, get proof of recent sale prices in your area, to show that your property should be valued higher. A lower LTV should convert to a lower interest rate.
The Financial Detectives will check the market for the best deals for you. The choice of lender for your remortgage is just as crucial as it was for your existing mortgage.
What else needs to be considered?
Remortgaging will usually get you a better deal when the introductory fixed rate period reaches its
conclusion. However, there are a number of fees and costs associated with remortgage applications
and processes. Ignore them at your peril.