Remortgaging.. something that nearly everyone who owns a property has to do. BUT what do we really know about it?
In short, remortgages are when you switch your existing mortgage to a new deal, either with your existing lender or a different provider. You’re not moving house and the new mortgage is still secured against the same property.
The more equity you have and the lower your loan to value, the more competitive the rates you’ll qualify for.
There can be a large number of reasons for making the switch including:
- To reduce the interest rate on your mortgage – one of the most common reasons
- To fix your monthly payments for a longer period of time
- Raising money to carry out home improvements
- Consolidate your personal debts
Taking a new interest rate could really save you money by taking advantage of a new offer. Another popular reason to remortgage is the option to consolidate all of your debts into one payment – however, be aware that as this means securing more debt against your home it may cost more in the long run, and it’s something you should seek advice on.
These are our top tips in making sure your remortgage goes as smoothly as possible.
Tip number 1:
Plan ahead. Starting your remortgage around 6 months before your deal is up gives you a good amount of time to consider all your options and do the right research. This means that you’re fully equipped with knowledge to make the right decision for you.
Tip Number 2:
Speaking of getting prepared … Have your documents ready to go when you talk to your broker. Now we have done a video on this so go check it out but the initial documents you will need to have ready include:
- Your last three months’ bank statements
- Your last three months’ payslips
- Proof of bonuses/commission
- Your latest P60 tax form, showing income and tax paid
- Your last three years’ accounts or tax returns (if self-employed)
- ID documents (usually a passport or driving license)
- Proof of address (e.g. utility bills or credit card bills
Tip number 3:
When deciding on a deal, Remember, it is not always about the interest rate, we need to factor in any fees associated, such as; product fees, valuation fees, any early repayment charges, application fee and any associated legal costs. Many lenders offer a number of remortgage incentives that can offset some of those costs. Consider the overall switch to a new lender and all the costs involved.
Tip Number 4:
When it comes to the length of time to complete on your mortgage. Making sure you have a great conveyancer/solicitor is KEY. So like we always say, make sure you choose a solicitor right for you… after all you will be working with them a LOT during this time.
Tip Number 5:
If your choosing your mortgage term, REMEMBER the lower your monthly repayment will be, as it will take longer to pay off, however, you’ll end up paying more interest to the lender over a longer period of time. If you choose a shorter the mortgage term, the higher the monthly repayments will be, but you ill clear your mortgage quicker and pay less interest to the lender.
When choosing how long you want your mortgage to be, think carefully of you monthly budget, because you’ll be committed to pay this, every single month!
We’ve created a series of remortgage videos to break down every step and MORE! If you have any questions, as always drop us a message, call us on 01925 573 328 or email us at [email protected]
