Remortgages
There are many reasons property owners look for remortgage deals, whether it’s to reduce their monthly mortgage payments, benefit from a lower interest rate or generate a bit of extra cash.
At Best Mortgage Direct, we aim to make the whole process of finding a new mortgage streamlined and hassle-free.
Everything is done online and over the phone to keep it fast and simple. We don’t bother with complicated jargon, and you can talk to our mortgage brokers seven days a week.
Our expert team will offer advice on when you should remortgage and any potential costs that might be involved in moving away from your current mortgage deal.
We scour the whole-of-market to find the best remortgage deals for your circumstances.
What is a remortgage?
Homeowners remortgage when they want to change the mortgage deal on their existing property. There are two options:
- Product transfer – staying with your current mortgage lender but changing your mortgage deal
- Full remortgage – choosing a new mortgage with a different lender
Our team of mortgage advisers will ensure you fully understand the differences between the two, and offer advice on which is the better deal for your circumstances.
Reasons for remortgaging
There are lots of reasons why people consider or decide to remortgage but they usually fall into two major aims: to save money or to raise money.
Remortgaging to cut costs
One of the most common reasons people seek to remortgage is because they are moved onto their lender’s standard variable rate. This is often their most expensive rate and higher than many fixed-rate mortgage deals.
In the same way as a lender’s SVR can affect your current deal, interest rate increases impact variable rate mortgages, sometimes positively, sometimes negatively. Switching to a fixed-rate remortgage could save you from unexpected hikes in monthly mortgage payments.
Property owners with more equity in their home will have a reduced loan to value (LTV) ratio in their borrowing, opening up the possibility of benefiting from lower remortgage rates.
Remortgaging can also be useful for people looking to overpay and end their mortgage sooner – without incurring early repayment fees. Homeowners with substantial savings can also take out an offset remortgage.
In all cases, our expert mortgage advisers can help identify the right deal for you. Contact us to find out more
Remortgaging to release equity
Remortgaging when your current mortgage deal ends can be a useful way to raise more money for a wide range of things:
- DIY or home improvements
- Consolidating debts
- Buying a new car
- Helping kids get on the property ladder
Although exploring deals from a new mortgage lender to raise extra cash can seem like a good idea on the face of it, there are many things to bear in mind.
Even if remortgage rates are more competitive than a personal loan, it’s not always the cheaper option, as you will likely have to pay interest on the existing mortgage balance for longer.
Talk to our mortgage advisers about remortgaging to save or raise money, and we’ll help find the best solution for you.
Reviewing your current mortgage deal
There are many factors that should go into every decision to remortgage. No matter your personal circumstances, we can help determine if it’s the right move for you.
It can be wise to remortgage if :
Your existing fixed-rate mortgage deal is ending. It’s worth keeping an eye on when your introductory period or current mortgage deal expires. We can arrange a remortgage with the same or a different lender up to six months before they come into effect, so you save money on monthly payments.
There’s a more competitive rate elsewhere. On the face of it, the grass can sometimes appear greener with a different lender but always factor in an early repayment charge (ERC) when remortgaging. They can erase any financial gains to be made from what you could borrow under a new deal.
The Bank of England base rate looks set to increase. Remortgaging a variable rate deal might help you avoid the interest rate hike but again, keep an eye on those ERCs.
Your loan-to-value (LTV) changes. An increase in the value of your property could make a remortgage deal an attractive option, depending on how much you could borrow.
Your current lender is too restrictive. If you’re unable to offset payments against savings or make larger monthly repayments to end your mortgage deal early, a good solution can be to change lender and remortgage.
Your deal does not include ERCs. If you’re unlikely to be hit by an early repayment charge, you’re free to remortgage at any time.
It’s not wise to remortgage if :
Your current rate is better than other mortgages on the market. We can do the research to confirm whether your existing deal is better than a new mortgage for your circumstances.
You’ve only just started a fixed-rate mortgage. Any advantages of remortgaging at the start of a fixed-rate new deal are minimal at best, and will likely incur heavy ERCs.
You’re in negative equity. If the property value falls for whatever reason, the loan-to-value will increase, potentially leaving you owing more than the property is worth. In this instance, it would be challenging to remortgage with a new deal.
You have little or no equity in your home. Homeowners at the very start of their deals are unlikely to have accrued much equity in the property or paid off a great deal of the mortgage loan. Many mortgage lenders have minimum equity requirements. If you don’t meet them, remortgaging is unlikely.
Your financial situation changes. If your income drops, it can make it challenging to secure a remortgage. However, your lender may be open to a product transfer mortgage deal if you seek to borrow the same amount while reducing your mortgage payments.
No matter your personal circumstances, from income to credit score, our mortgage advisers will ensure we get the right remortgage for you.
What is the lending criteria for a remortgage?
As with your original mortgage, your individual situation will determine whether you are eligible for a remortgage on the same property and how much you could borrow. Most mortgage lenders’ criteria include:
- Affordability checks
- Credit score/credit status
- Maximum age
- Property type
- Loan-to-value
What is the remortgaging process?
Remortgaging is a very similar process to applying for a traditional mortgage. Our team will find out why you’re looking to remortgage, whether it is to pay off your mortgage early or raise equity.
We will then scour the whole-of-market to find the best remortgage deal for your circumstances, including detailing how much you could save, before beginning the application process.
The Agreement in Principle
An Agreement in Principle (AiP) can be obtained in person or online, and allows clients to find whether mortgage lenders are willing to loan the amount needed without affecting your credit score.
At this stage, it’s more of a guide to your options. You don’t need to have a specific remortgage deal and an AiP is not a guarantee from a lender.
Factor in additional mortgage costs
Remortgaging can help homeowners make savings on their monthly payments but it’s always wise to remember any additional costs, even if they stay with the same lender. They can include:
- Application fee
- Valuation fee
- Legal fees
- Lender exit fee
The remortgage application
When the AiP is granted, our mortgage brokers can begin the process of applying for your remortgage.
You will be asked for documents proving your personal and financial circumstances, including your monthly outgoings and credit commitments, alongside details of your existing mortgage deal.
Completing your remortgage
In the final stages, your current lender or new mortgage provider will arrange for the property to be valued. Lenders will also carry out a credit check to verify your financial circumstances before making the mortgage offer.
You may need a conveyancer or solicitor to deal with the mortgage transfer, but most lenders offer this as part of their service.
Our team of experienced mortgage brokers will offer guidance and support at every stage of the remortgage process, ensuring you understand what is happening and why.
Contact Us
If you have any questions about remortgaging or taking out a traditional mortgage, call us on 0131 463 5678. We look forward to hearing from you.