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Joel Piveteau and Kirsty Hill recap on remortgaging.
What is remortgaging and what are the options?
Your current lender’s fixed rate is due to expire and you’re going to move on to the variable rate; or perhaps you want to raise money for home improvements or for debt consolidation. These are typical times where people look to remortgage.
Alternatively there might be a change in family circumstances that mean you need a new mortgage deal. The key one at the moment is when your current fixed rate is due to end. In the current climate, where rates are almost certainly higher than they were when you arranged your mortgage deal, it’s important to start thinking about remortgaging and reserving a rate up to six months before your current fixed rate ends.
When is it a good time to remortgage?
About six months before your current deal expires. Whether you switch lenders or take another product with your existing lender, usually they are valid for six months. As I said earlier, with regard to the rate changes that are happening at the moment it’s always good to try and reserve something as soon as you can.
Then, if rates increase, you’ve got a good deal. Or, if rates start to reduce, a broker such as ourselves will monitor the rates going forward and will move you to a lower rate if one is available.
There are lots of reasons to remortgage. It might be that you want to add an extension to your home or consolidate some debts. When rates were historically low during Covid, lots of people were coming out of their existing mortgages to gain a better rate, because they would save quite substantial sums.
Last autumn when interest rates started to rise quite rapidly, many people remortgaged early to secure a rate before they went up.
If you think now is a good time to remortgage, just pick up the phone to us. We can always give you advice that’s most suitable for you. It only takes five minutes to assess your situation and decide whether now is a good time or perhaps if it might be worth waiting.
When is remortgaging not a good idea?
You may be tied in on a fixed rate, and to come out of it may involve an early repayment penalty. When you factor the cost of that in, it might not be the right thing to do.
You might also find that the variable rate that you’re moving on is not actually as high as the current fixed rate, in which case it’s not worth changing your deal.
Why remortgage at the end of a fixed rate deal? What happens if I don’t?
People often remortgage at the end of their fixed rate deal to get a better rate, or at least avoid moving on to the lender’s standard variable rate. If you don’t remortgage at the end of your fixed rate, you revert to the variable rate, which in most cases will be higher than the rate that you were paying.
People will sit on the variable rate if they’re planning to move home in the short term, or they have an immediate change of circumstances. But in most situations, we could move you on to another product with no redemption penalties – and that will often be cheaper than the standard variable rate.
Speak To an Expert
We’ve got customers all over the country, as we can deal with you over the phone, online on teams. So you don’t have to be based in the Sussex region to use us. We have access to the whole of the market and we’ll happily chat to you wherever you are.
How do I improve my chances of getting a good remortgage?
Being prepared is important. Make sure your credit profile is up to date. A lot of lenders will now immediately decline any application if you’re not on the electoral roll, so ensure you’re registered to vote where you’re residing.
Have your proof of income ready and get a credit report or a breakdown of your credit commitments. Once we’ve got that information we can put that through our system. We deal with 101 lenders so we can run it through and come back to you with some options that will hopefully put you in a better position.
The banks all have different criteria and assess people’s individual circumstances differently. What one bank may lend you will be totally different to another lender. If you just concentrate on dealing with your bank there is only one set of criteria to meet – and often your circumstances will not allow you to do what you want to do.
Meanwhile there may well be another high street bank that will accept your circumstances and lend you what you require. It may well be at a cheaper rate or have a lower arrangement fee, or it might have free valuation or cashback or other bits and pieces.
By talking to a whole-of-market independent broker like ourselves you have access to over 100 lenders and our expertise to place you with the most suitable deal.
What fees are associated with a remortgage?
We would do an Agreement in Principle for you with no fee. If you decide to proceed to a full application at that time we would advise you of our broker fee. Typically a remortgage fee is about £244.
How can a mortgage broker help?
If you’ve had a change in circumstances and you feel it might not necessarily put you in a good position for a remortgage, do speak to us. As Joel mentioned, every lender’s criteria is different. You might have done a bit of ‘Googling’ and think that because you’ve gone from employed to self-employed, for example, you now can’t get a mortgage.
But actually there’s a chance that with a different lender we can find you a mortgage for your situation. The worst case scenario is that if there aren’t any other options, as long as your mortgage payments are up to date we can speak to your existing lender and renegotiate a rate with them.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up with your mortgage repayments.
You may have to pay an early repayment charge to your existing lender if you remortgage.