Mortgage repayments will be one of your biggest monthly outgoings. Remortgaging your home can save you money each month which can add up to thousands of pounds over the term of the mortgage.
Why should I remortgage?
The most common reason for remortgaging is to save money. You may well find that switching to a different provider gives you lower monthly repayments and a lower overall cost, even allowing for the fees associated with remortgaging.
Many mortgages have either a fixed interest rate or an interest rate which is discounted from the mortgage company’s standard variable rate. In both cases, the fixed or discounted rate will expire after a set period. If you don’t remortgage, you will have to pay the higher standard variable rate when the fixed or discounted rate ends. This can mean your monthly repayments rise significantly.
Remortgaging your property gives you the opportunity to change the type of your mortgage, for example from a variable rate to a fixed or discounted rate, or to an offset account. You may also choose to reduce or extend the term of your mortgage. For more information on the different types of mortgages, read our guide here.
Some homeowners decide to remortgage to increase the amount they borrow, for example, to fund home improvements or to consolidate debt.
If the value of your home has increased since you took out your mortgage, you may be able to take advantage of the lower ‘loan to value ratio’ to get a better mortgage deal. Even if the value of your home has remained the same, the repayments you have made will have reduced the amount of your loan compared to the value of the property. Mortgage companies will offer better deals for lower loan to value remortgages.
When should I start the remortgage process?
It is best to start looking for a new mortgage two to four months before your current deal comes to an end. This will give you enough time to complete the process and minimise any time you may spend on the standard variable rate at the end of your deal.
How long will a remortgage take?
Remortgaging with a different mortgage provider will generally take around 8 weeks. This is because there is legal work to complete and the mortgage company will also want to value your property. If you choose a remortgage with the same provider, the process will be quicker.
What else should I consider?
Always check any redemption fees associated with your existing mortgage and when these apply. Most mortgage companies will require high exit fees if you end the mortgage during the fixed or discounted term. Fees usually drop after the fixed term has ended. In some cases, the savings to be made by remortgaging outweigh the impact of high exit fees but for most people, it is best to wait until the fixed term is over and the fees fall.
Remortgaging is not always possible. If your circumstances have changed since you took out the mortgage, you may find that a remortgage is not available. This can be the case if you have become self-employed or one partner in a couple is no longer working.
How can OneDome help?
OneDome simplifies the remortgage process by moving everything online and in one place. Find out more about how OneDome can help get you a mortgage here. Additionally, our mortgage advisors will give you expert advice on remortgages. If a remortgage is right for you, we can help to find you the most suitable deal, making the process as easy as possible. Get in touch with our advisors on 020 3868 6262 today.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Your home may be repossessed if you do not keep up repayments on your mortgage.