Remortgage and Remortgaging Issues

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There are many reasons why you may want to remortgage. We shall discuss some key issues involved in remortgaging

 

• Remortgage for home improvements
• Remortgage - Fixed, Capped or Discounted Rate
• Remortgage for Debt Consolidation
• Comparing mortgages
• Remortgage to lower your mortgage payments
• Mortgage Term
• Remortgaging - First step
• How much will it cost

 
Every homeowner should review their mortgage periodically to ensure they are getting the best deal. Remortgaging is not a difficult process and mortgage lenders have taken steps to reduce the work involved.

Need some help, we can help you navigate your way through to the best deals - please phone 08456 44 88 23 or complete the enquiry form.

Remortgage for home improvements

If you want to raise capital for home improvements or to buy a car, then re-mortgaging may offer the prospect of some low interest finance.

This arrangement may suit you as it will make capital available for a low monthly outlay.
You should bear in mind that the additional capital will be added to your existing mortgage and paid off over the mortgage term. This will mean that over the mortgage term you will pay more in interest.

Remortgage for Debt Consolidation

You may have built up debts on a credit card or personal loan. These sources of borrowing are likely to charge much higher rates of interest. Remortgaging can be used as a means of consolidating your debt into a lower, single monthly payment.

You should consider that you will be moving borrowings that are 'unsecured' to your mortgage which is secured against your home. If you are unable to maintain your new mortgage payments then your home may be repossessed

The additional capital borrowed will be added to your existing mortgage and paid off over the mortgage term. This will mean that over the mortgage term you will pay more in interest.

Remortgage to lower your mortgage payments

When a mortgage is taken out, most people take a mortgage with a fixed or discounted rate for the first few years. These interest rates are typically lower than the lenders standard variable rate and are offered as an incentive to attract new borrowers.

At the end of the fixed or discount rate period, your mortgage will revert to the lenders standard variable rate. At this point you should consider whether there are any better deals available.

It is in every borrowers interest to check their loan arrangements regularly. The size of the mortgage loan means that a small difference in interest rates can mean quite a large difference in the mortgage repayments.

Some lenders will seek to retain their clients by offering follow on discounts or fixed rates. Before accepting these rates, Have a look at what other lenders can offer.

 

Remortgaging - First step

If you are considering re-mortgaging, the first thing to check is the terms of your current mortgage. Are you on a fixed rate? Until when? What happens at the end of the fixed rate? Does your current lender charge an early repayment charge; most lenders will charge a early repayment charge during a fixed, capped or discount period. Some lenders may extend the penalty period beyond the incentive period.

Check what options your current lender has to offer.

Check what options we have to offer

You are likely to be offered both fixed, capped and discounted rate options

 

Remortgage - Fixed, Capped or Discounted Rate

The choice between scheme type may be influenced by a number of factors:

Interest Rates:  

Movement in interest rates will affect all variable rate mortgages. The Bank of England base rate represents the cost of borrowing to the lending institutions and any variation in this rate will affect mortgage rates.

To see how interest rates have varied over the years, please see the following link to the Bank of England base rate table and chart

http://www.bankofengland.co.uk/mfsd/iadb/Repo.asp

You will note that over the last 20 years there has been a declining trend in interest rates from a peak of 16% in the 1980's to the recent low of 3.5%. You could view this as evidence that further cuts are on the way, or you could take a view that rates are likely to rebound. 

 

Attitude to risk

Interest rates can rise as well as fall. If the thought of rising interest rates concerns you then you could consider either fixing the interest rate or alternatively applying a cap, or upper limit to the rate. 

 

Income and outgoings

Your personal situation may dictate which scheme to choose. If your income is limited for the next few years then fixing the interest rate may be sensible. If on the other hand you are aware that you will be receiving a cash lump sums then flexibility may be more important

 

Early Repayment Charge

Early repayment charges may affect you if you sell or re-mortgage your property during the penalty period. What is less often understood is that you can be penalised even if you make a part repayment. 

Think about your future plans:

Are you thinking about moving house, if so when might this happen.
Is it possible that in the foreseeable future, you may receive a cash lump sum - would you want to pay off some of your mortgage, if so when might this occur.
Would you be interested in making monthly overpayments and so paying off your mortgage early.

Comparing mortgages

Please complete the 'fact find' form with your enquiry.
You can discuss your situation with an advisor on 08456 44 88 23. 

Mortgage Term

If this is a pound for pound remortgage then providing the term of the mortgage remains the same you should be able to directly compare the new monthly mortgage payments with those of your existing lender. 

You can choose a different term to the term of your current mortgage. If your mortgage is capital and interest then if you extend the term you will reduce your monthly mortgage payments

If your mortgage is interest only and backed by an investment policy then the term should correspond with the maturity date of your investment.

 

How much will it cost

You may need to consider the following charges:

Valuation fee
Lenders Arrangement fee
Higher lending charge
Legal fees
Contact us to discuss exactly what fees are payable
There are no broker fees to pay with Mortgages Direct.

How long will it take

Typically, three weeks from application to mortgage offer, another three weeks from offer to completion. The time taken depends on the lender and the speed of the legal team processing your application.

Please feel free to contact us if you have any query. Remember, we do not charge you any fees under any circumstances!