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Article created by Christian Duncan, Director – Mortgage and Protection Adviser
Last updated 9th August 2023

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The concept of remortgaging can indeed seem daunting when mortgage interest rates are peaking. 

Is remortgaging my home a good idea? When should you remortgage? What is the meaning of remortgage? We’ve heard these questions countless times, and we’re here to answer them all. This comprehensive guide will shed light on the intricacies of remortgaging in the UK, discussing its benefits, potential pitfalls, and the overall process.

What Does Remortgaging Mean?

Remortgage means renegotiating your current mortgage or switching to a new mortgage deal, either with your existing lender or a new one. Whilst the term might appear intimidating, it’s a common practice across homeowners in the UK, primarily done to secure better interest rates, consolidate debts into their mortgage, or fund significant expenditures like a home extension.

When Should You Remortgage Your Home?

Determining when to remortgage is as vital as understanding what it entails. Opting to remortgage can span from reasons like seeking better interest rates or shorter terms to funding home improvements, consolidating debt, or raising capital. However, it’s crucial to shift your current deal when you’re nearing the end of your fixed-rate, discount, or tracker deal. Doing so prevents you from reverting to the lender’s standard variable rate, which is typically higher.  Ultimately this will result in your monthly payments increasing.  

On top of that, if your house value has increased significantly, or you’re not capitalising on lower interest rates, it’s worth considering remortgaging.

How to Remortgage Your Home

Embarking on your remortgage journey necessitates a step-by-step procedure:

1. Evaluate Your Needs and Options

Before diving headfirst into the remortgage pool, take stock of your present circumstances. Are you searching for lower repayment rates, shorter terms, or cashing out equity? Determining why you want to remortgage will help your mortgage adviser fine-tune your search for the best deal.

2. Speak with a mortgage broker

Speaking to a qualified mortgage adviser will broaden your options when it comes to remortgaging your home.  By doing this, you are putting yourself in the best possible position to achieve the best outcome for your circumstances.  This will be inline with your goals and aspirations.

3. Run a Check on Valuations

Having an accurate picture of your property’s current market value is useful for negotiations and understanding the amount of equity you have.  A remortgage valuation helps to understand how much lending may be available.  Looking at the recent sold prices within your area can be a great way of establishing your current property value.  Your mortgage broker will be able to assist you with this.  

4. Understand the Costs Involved

Remortgaging may save you money down the line, the process usually comes at a cost. Charges such as legal costs, broker fees, valuation fees, and even early repayment charges from your existing lender can eat into your potential savings.

5. Submit Your Application

After setting everything else in order, your mortgage broker can submit your remortgage application to the chosen lender, who will conduct their checks before approval.

Summing Up: Is Remortgaging a Good Idea?

Remortgaging is a savvy financial move when executed at the right time and for the right reasons. Whether you’re looking to cut your monthly costs, shorten the loan term, or pull out cash for other uses, remortgaging offers the flexibility to rearrange your finances.

However, ensure that saving from a better interest rate isn’t affected by the remortgage costs that could be involved. 

Also, consider the term length — while lower monthly payments may seem appealing, a longer-term means more interest payable over the lifetime of the mortgage.

Therefore, it’s crucial to evaluate all aspects—understand the mortgage amounts, check if moving to a cheaper house increases your borrowing value, stay informed about the tie-in fees, ponder the question ‘can I move my mortgage to another house?’ and explore the potential of debt consolidation within your mortgage.  

Understanding Remortgage Fees

Deciding to go ahead with remortgage requires clarity on the cost front. Few of the substantial costs include:

  1. Early Repayment Charge (ERC): Predominantly applicable if you switch lenders or repay the mortgage during the initial deal period.
  2. Exit Fees: Most lenders charge a small administration fee when you close your account.
  3. Legal and Valuation Fees: These generally cover the cost of transferring the loan to the new lender, and a new survey of your property’s value.
  4. Broker Fees: 

These costs play a significant role in determining whether remortgaging is the best fit for you. The idea is to ensure that the benefits from remortgaging outweigh its costs.

Weighing the Benefits: The Upside of Remortgaging

By now, you might be wondering, “why should I remortgage my home?” The answer to this question lies in a host of potential benefits, including:

  1. Lower Interest Rates: If you’re on your lender’s Standard Variable Rate (SVR) or your fixed-rate period is nearing the end, you might benefit from a remortgage.
  2. Debt Consolidation: You might consider remortgaging to consolidate expensive short-term debts into your mortgage.
  3. Home Improvements: People often remortgage to extract equity from their homes for significant alterations or extensions.
  4. Change in Financial Status: A change in job, income, or personal circumstances might prompt a remortgage.

Remember, remortgaging can serve as a powerful financial tool. By understanding what it is, how it works, and when to consider it, you can take faith in our qualified mortgage advisers at the Manchester Mortgage Centre. 

It’s all about making the right moves at the right time, and hopefully, with this guide, you’re now better equipped to do just that.  If you would like to book a call with a mortgage adviser who can take care of this then please book a call.  

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