Your mortgage deal is probably coming to an end, and you will be looking out to save money by finding out a new offer. You may need extra funds either to buy a new property or to do up your existing house to increase its value. Whatever the reason, here is the complete guide that discusses the aspects of remortgages from A to Z.After you are clear how things work, contact us to get an advice with no fees.
What is Remortgage?
A remortgage is a process in which you take out a new mortgage on the property that you own to either replace your current mortgage deal or borrow money against the same property.
In simple words, it can be defined as a process of switching from the existing mortgage to a new deal using the same property as collateral. You can remortgage with either the same lender or a new lender.
Reasons to Remortgage
There are several reasons you will be looking out to remortgage. For instance, your existing mortgage deal is not competitive, your home’s value has gone up a lot, interest rates have increased, or you want to borrow more money. There can be as many reasons as possible, but the majority of borrowers want to remortgage for these three specific reasons:
- To pay lower interest rates - Since the average repayment period of a mortgage is 25 to 30 years, the equity of your home is likely to have increased. The higher equity means the lower loan-to-value that enables you to secure the deal at lower interest rates. Remortgaging will help you repay over a longer period, and the size of your monthly repayments will be smaller. If you took out a mortgage for first-time buyers a few years back, now is the high time to explore the best remortgage deals.
- To borrow extra funds - Your lender is likely to deny lending more money unless you have settled the whole of your mortgage. You can contact a new lender to remortgage at lower interest rates and a small repayment size.
- You may want to overpay - You might have had your pay rise, or you may have got money inherited. Your current lender might be prohibiting you from overpayment. A remortgage will allow you to get the deal with a lower interest rate, and the size of your loan will decrease.
Which Remortgage Should I Opt For?
You will get a wide range of both fixed and tracker remortgage deals. Before you switch to a new deal, you must look out for saving money. You will pay fees when you close your current mortgage deal and when you take out a new mortgage. Calculate the total amount of fees you will pay during remortgage and analyse that it is less than the amount you save by switching to a new deal. You can use popular mortgage calculators like the Halifax mortgage calculator and Moneysavingsexpert mortgage calculator to compare the cost of your remortgage.
Please note that some remortgages are only available:
- If you have a stellar credit history
- You are not a new borrower to the lender
- You have at least 40% of the deposit
Types of Remortgage Deals
Following are the remortgage deals that most borrowers like to obtain:
- Fixed mortgages - As the name suggests, your monthly repayments will be the same throughout the term of the deal, so you do not have to be worried about fluctuations in the base rate. You will know what you are paying each month.
- Tracker mortgages - These are a type of a variable rate mortgage. The interest rate will not be the same throughout the term of your mortgage as they fluctuate according to the Bank of England Base Rate. For instance, if the Base Rate increases or decreases by 0.4%, your mortgage rate will also increase or decrease by 0.4%.
- Freedom to fix tracker mortgages - It also acts as a tracker mortgage, but you have the facility to switch to a fixed-rate mortgage without paying off any fees anytime you want to. Please bear in mind fixed rates in the future may not be as competitive as they are today and you have only a single chance to switch.
GUIDE ON HOW TO APPLY FOR BEST REMORTGAGE DEALS WITH NO FEES
Applying for a remortgage deal is as simple as taking out mortgage loans. You have to fill out the online application form on the lender’s website. Then it will consider your financial circumstances as well as your repayment capacity. In most of the times, the entire procedure will be done in the same way as the lender does when you applied for a mortgage for moving home.
THINGS TO CONSIDER BEFORE APPLYING
- Incomings and outgoings: You need to submit evidence of your monthly income and your monthly expenses such as utility bills, medical bills, other debt repayments etc. Lenders ask for such documents to consider your affordability.
- Credit checks: Each lender runs a credit check to evaluate the default risk. Our assistance allows you to opt for a lender so that when you submit the online application form, you need to go through only a soft credit check. It does not affect your credit rating because hard inquiries do not show up on your credit report. A full credit check is done when you fill out the complete remortgage application form. We recommend you to take a look at your score before applying for the remortgage.
- Affordability: Your income statement and other financial factors are considered to decide on the deal that fits your budget. If you want to know how to get a mortgage with bad credit but good income by 'Clicking here'
- Conveyancing: Under some specific circumstances, you will have to arrange a conveyance solicitor for additional legal work. The solicitor will verify your ID, current mortgage, property, and registry and find out the value of your property and so forth. Don’t worry; we will arrange the professional on behalf of you.
If you have finally decided to apply for a remortgage, you may need a couple of documents to speed up the process:
- Payslips of the last three months
- P60 to prove that you have paid tax
- ID proofs to confirm your identity and address. You can submit passport, bank statements and utility bills
- Mortgage statement to show that you have been paying repayments of your current mortgage
STEPS TO APPLY FOR REMORTGAGE
Follow these five steps to apply for remortgage:
- Value your property: The property value would have changed now, so the first step is to know the actual value. This method will help you choose the best mortgage deal at lower interest rates.
- Check your current mortgage: Talk to your lender to know when your mortgage deal ends, whether you can remortgage or not. Do not forget to check if your lender will charge any fees for switching to another mortgage deal. Your lender may send you a redemption statement to disclose the cost of your mortgage repayment including early repayment charges.
- Affordability check: Use the remortgage calculator to know how much you will be able to borrow. It will give you an estimate of total cost and monthly repayments. Do not ignore the importance of affordability or else you will lose your property.
- Get advice: We provide round the clock customer support. Do not hesitate to talk to our representatives who will let you know about the entire remortgage details after knowing your financial condition. It will help you know about the best remortgage deal.
- Apply for your remortgage: If you have obtained a successful approval from lender’s representative, you are free to apply for a remortgage deal. During the application procedure, you need to submit documents to prove your affordability, and the value of your property will also be calculated before you sign the agreement.
How Long Does a Remortgage Complete?
Remortgage application procedure does not take a long time because Shine Mortgages suggest the names of only those lenders, who deal online. Please arrange all of your documents beforehand when you fill out the application form. It will save your time. The entire procedure is completed within 30 minutes, as our expert stands with you altogether.
It is never difficult to get the best remortgage deals with no fees and flexible repayment plans. More important is to keep your finances stable and strong. The mortgage process works around your financial circumstances, keep that stable, and you can get what you want.
Is Remortgage Possible with Bad Credit Score
Bad credit remortgage is also possible like mortgages for bad credit, but you will end up with paying off slightly higher interest rates compared to those with a good credit score. You can choose the deal with a fixed and variable interest rate based on your affordability. Make sure that you will be able to repay your all instalments on time; otherwise, the lender will possess your property to liquidate it.
If you are planning to remortgage, you should focus on building your credit with the following ways:
- Repay all your loans on time.
- Settle your credit card bills within the grace period.
- Take out credit building loans.
- Make sure your credit report does not consist of errors.
- Pay out all your utility bills on the due date.
PROS AND CONS OF REMORTGAGES
Our primary aim is to guide you correctly so that you do not fall into anyone’s trap. Here are some of the pros and cons of remortgages that you need to consider before applying:
|Advantages of Remortgage||Disadvantages of Remortgage|
|You will borrow funds at lower interest rates.||Debts for a longer time can increase the overall cost|
|They reduce your loan-to-value.||Lenders can repossess the home that you used as collateral|
|You will get a more flexible deal.||A remortgage may include fees that you have to pay|
|You may consolidate your debts.||The process may take days or weeks|
We hope that you have found all the necessary details about remortgage. Shine Mortgages, as one of the leading UK mortgage broker, finds out the appropriate and competitive remortgage deals for you. Do not wait if you want to remortgage as it can help you save huge money.
What are the benefits of remortgage?
Some of the significant benefits of remortgage can be:
- To take advantage of new rates and products available in the market
- To do home renovation
- To save money
Is remortgaging a good idea?
Yes, remortgaging is a good idea if you are thinking of saving money by opting for a less expensive deal with lower interest rates. However, you must be aware of the processing fee or administrative fee that the existing or new lender may ask from you.
How much can I remortgage my house for?
The precise amount of remortgage totally depends on your repayment history and latest financial conditions. However, to be precise, one can borrow equal to the due amount on the current mortgage. Besides, the other factors like current interest rate and the effect of base rate are also important because they affect the over all cost.