Good reasons to remortgage
There are a number of reasons to re-mortgage - the most common being:
- To get a better mortgage rate: check the details of your current mortgage - compare the interest rate and the type of mortgage you have with what is currently on the market. Take a look at Know Your Money's competitive remortgage deals.
- To consolidate debts: the ability to combine all debts neatly in to one place (your mortgage) is very appealing to some people. Particularly if you owe money in several different places - overdraft, credit cards, loans. Do ensure that you can comfortably afford the single monthly mortgage payments and also remember though this may be the simplest way of organising your finances - it might not necessarily be the cheapest.
- Improvements to the Home: remortgaging could be your answer if you can't afford the cost of moving but need more space, fancy a new kitchen / bathroom or just desperate to turn the old plastic conservatory in to a new 'garden room'.
Good Reasons not to remortgage
- You only have a short time (say under three years) before your mortgage is paid off completely but you're wanting to re-mortgage for a better deal. This is because the costs & fees involved in the change may far outweigh the potential money-saving gain you could make. Of course - this isn't a problem if the reason you are re-mortgaging is for Equity Release or Home Improvements.
- If you're currently in a mortgage where the redemption penalties are too high.
- Your finances are in a REAL mess. Remortgaging may look like the perfect answer but first talk to an organisation like the Citizens Advice Bureau. Remember, if you can't keep up your mortgage repayment - you could lose your home!
What's the cost?
Well that really will depend on the lender as it will vary from from lender to lender. There's also different fees for different remortgages which will cause a variation in the cost. Some fees associated with remortgage can be: loan application fee, appraisal fee, broker fee, legal fees, early pay off fees and possibly others. Don't let that put you off but do remember to make sure you are aware of all the additional and/or differing costs.
What's the process?
- The first thing to do is talk to your current lender. You'll want to find out exactly how much you currently have outstanding on your mortgage, the value of any early redemption fees that you may have attached to the mortgage and other fees. Bear in mind also that your current lender may want to tempt you to stay with one of their own better deals rather than lose your custom.
- The next thing to do is take a look at the best remortgage deals available. Have a look at the Know Your Money remortgage comparison tables for the best we have on the market.
- Once you've researched the market and buttoned down the remortgage deal you're after - the next step is to put in the application - usually completed now online (with signatures required at a later point).
- Very like an initial mortgage application - there will be a delay whilst information is passed between yourself and the lender. They will want to see certain documentation; current mortgage information, salary/wage slips and also a credit history report. Once they have completed their checks and processes (approx 3-6 weeks) you'll need to put your signature to the lender's documents.
- Once they are in receipt of the final signatures - the previous lender will be paid off and you can make the most of you re-mortgage!
Tip: Shopping around for fresh introductory deals may save money even with penalties and legal fees. Mortgage brokers are available to help with the sums. If you do change, your mortgage broker may try to sell you payment protection insurance, which covers any payments you miss through illness. There is no obligation to take this and even if you do, it may be available more cheaply from another provider.
To compare the latest remortgage rates from leading UK lenders click here.
Author: KYM Editor
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