Are you struggling with the complexity of all mortgage products you see? Check some of our FAQ’s below for common answers to some of the most common remortgage questions you have.
1. What exactly does remortgaging entail?
Remortgaging is what you do when you switch mortgages. This could be from one lender to another. It also could be you’re changing your mortgage product to another with the same lender. The remortgaging process has been around in the UK for a long time. Millions of people every year remortgage properties across the UK. Last year saw 1.6 million borrowers in the UK switch mortgage products.
2. Is it different to a second charge mortgage?
Yes, we answer many of your remortgage questions here and yes, though the two are often confused. A second charge mortgage is an additional mortgage, not a remortgage. It works by running in conjunction with your first charge, or primary mortgage on your property. You can only have a second charge mortgage if you have a primary mortgage in place already. Second charge mortgages require the first charge lender to be in agreement for the loan to proceed. Remortgaging is the most frequently used way of accessing additional funds through your property.
3. When’s the best time in your mortgage term to remortgage?
Usually when you’re heading for the end of your cheaper fixed rate or other introductory mortgage discount with a lender. Once these have finished, you’ll be shifted to lender’s Standard Variable Rate (SVR); which is almost always more expensive, and will almost certainly mean that your monthly mortgage payments will increase – usually by a sizable amount. If you are on a Standard Variable Rate you should be able to get a cheaper deal right now.
4. Is 2019 a favourable time to remortgage?
Yes, as the statistics above show, thousands of people are taking advantage right now. Interest rates are historically low and there’s intense competition amongst lenders. Fixed-term deals are particularly good value. That’s right from two-year fixes up to ten-year fixes. Brexit does mean that the economic situation now is uncertain. Many people are taking the view though that remortgaging gives them control over their biggest outgoing now.
5. Will remortgaging be a huge hassle?
No one likes paperwork, that’s true. But, don’t be put off by the experience you had in the past when arranging your mortgage. Remortgaging is far simpler than getting a mortgage. You don’t have a property sale to deal with and so there’s less forms to fill in and effort for you.
6. Why should I bother to remortgage?
If you’re on your lender’s SVR, it’s a no-brainer. You are very likely to save yourself a lot of money because your monthly repayments will drop. But it’s also worth doing if you want to access the hard cash equity in your bricks and mortar. Say you’ve owned your home for a while. It’s now worth £500,000 with a mortgage of £250,000 against it. You can remortgage against part of the value of the current property value, acquiring cash to do something else with. Many people do this to raise money for home improvements.
7. What should I be thinking about when I look at remortgaging products?
You should make sure the product fits your circumstances and your future plans. Definitely ask yourself all the below:
- Do I want a fixed or variable rate mortgage?
- If the new mortgage product is at a fixed rate, is it cheaper than what I’ve got now?
- If I’m choosing a variable rate, what’s the likelihood interest rates will go up or down?
- Can I weather any fluctuations in interest rates?
- Are there early repayment charges or exit fees with the product I have now I should factor into my sums before deciding to remortgage?
8. Should I use a mortgage broker?
Up to you. If you know you’ve found the best value product online that you’re eligible for; you’re sure it fits your long-term circumstances and you’ve pored over the terms and conditions, then no. That’s providing you’re happy to do the legwork yourself and get all the paperwork in order for the affordability tests.
If you’re going cross-eyed trying to make sense of the best buy tables and small print, then yes. A good broker will do their research so that you get the best possible deal and rate for your situation.
He or she will also take care of your new application, affordability checks and paperwork. Best of all, they take care of the heavy lifting during the process. They’ll submit the application on your behalf and follow through to the remortgage offer.