Remortgaging is a process by which homeowners can replace their current mortgage with a new one. This is more common than you might think, with nearly a third of all UK home loans being remortgages.
This guide explores exactly what remortgaging is, and some of the important things to think about when considering one.
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There are many different reasons why people consider remortgaging their property. For many people, a mortgage is one of their biggest financial commitments. Therefore, it’s important to only apply for one for the right reasons, helping you to get the most from its numerous different benefits.
Homeowners typically apply for a remortgage in the pursuit for better deals (and therefore lower rates) from their current mortgage. Finding a better mortgage may also allow a homeowner to borrow more money than their current home loan allows. This can be very useful for those wanting to make some significant home improvements or to pay off other debts.
It is always important to make sure that borrowing money from your mortgage is the best option for your financial situation, and that other means of borrowing have been explored before applying for this.
Some of the other common reasons people remortgage their homes are concerns about their interest rates going up, the value of the property has risen significantly, or the current home loan is nearing the end.
A lot of the best mortgage deals out there are quite short-term, especially for fixed rate and tracker mortgages. When this deal ends, the current lender may then put a homeowner on an SVR (standard variable rate), which will most likely come with higher interest rates than the previous deal. Therefore, searching for new mortgages when your current deal is about to end is a great way of saving money on your home loan.
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As previously mentioned, remortgaging is a common process that most homeowners will go through. With fixed rate and tracker mortgages only lasting from 2 to 5 years, it’s good to know how to go about looking for a new deal to avoid being put on an SVR loan and to save yourself some money!
Those considering a remortgage should firstly contact their current lender and ask if there is the possibility of switching to a better deal with them, whilst also checking if there are exist fees to pay with this.
Next, those looking to remortgage should compare what other mortgage lenders have to offer, and what type of mortgage deal to go for (tracker, fixed rate, discount mortgage etc.). It is vital during this step that homeowners check any and all fees and charges that come with each potential home loan in order to get the best rate for them.
Once numerous different mortgage deals are found that could save a homeowner money, it might be helpful to speak to an independent mortgage broker. An independent mortgage broker could help better judge which mortgage would be best for someone’s current situation, and advice accordingly.
What Are The Fees and Charges Involved in Remortgaging?
This will be dependent upon your current and future mortgage lenders; there may be administration fees for remortgaging your home, in addition to product fees and other potential charges, all of which are entirely dependent upon your situation. It is therefore crucial to both research and understand all potential fees and charges you could face through the remortgaging of your home.