What is remortgaging?
Remortgaging involves taking out a new mortgage on a property you already own – either with the same lender or a different one – either to replace your existing mortgage or borrow money against the property.
Why should you remortgage?
The main reason to remortgage is to save money. A mortgage is most people’s biggest financial commitment, so it follows that streamlining this debt can also result in the biggest saving.
Nearly all mortgages have an introductory offer that ends after a few years, after which you’ll switch to the lender’s standard variable rate – which will almost always be more than what you were paying.
By remortgaging you can switch to a lower rate, reducing your monthly payments and potentially saving hundreds each month.
When should you remortgage?
There are a number of situations in which it could make sense to remortgage your home. Here are some reasons you might decide to do it:
- Your current deal is coming to an end
- The value of your property has increased a lot
- You want to switch from interest-only to repayments
- You want to overpay but your current lender won’t let you
- You want more flexibility
- You want to borrow more money
MoneySavingExpert also offers a handy online calculator that works out whether it’s worth paying to get out of your current mortgage to switch to a new one with a lower rate.
When shouldn’t you remortgage?
There are some circumstances in which remortgaging probably won’t be the best option. Here are some reasons not to:
- You have a large early repayment charge
- You have a small mortgage debt
- Your property has decreased in value
- You have very little equity
- Your circumstances have changed
- You’ve had credit problems since you took out your last mortgage
- You already have a really good rate
How to remortgage
If you’ve considered the points above and decided now is a great time to do it, it’s time to look at how to remortgage your home.
When looking for a new mortgage, it pays to shop around as much as possible. Use mortgage comparison websites like:
Remember, the different comparison sites will all give you different results, so use more than one.
If you find some deals you like the look of, do some research online into the types of product you’re considering and the features they offer.
It always helps to get advice from a professional mortgage adviser. As well as benefiting from their knowledge and expertise, you’ll have extra protection because you can complain to the Financial Ombudsman if things go wrong.
Switching to a new lender could take up to two months, while switching to a different product with the same lender may take less time. Either way, you should start your research at least three months before you want to switch to make sure it fits in. This is particularly important if you want your remortgage to coincide with the end of your current deal.
When, why and how to remortgage your home: A summary
Remortgaging your home could help you save a considerable amount of money and guard against interest rate rises, but it’s important to weigh up the pros and cons before switching to a new product.
We hope our guide has given you a better idea of when, why and how to remortgage. For more information, check out this guidance from the Money Advice Service.
If you have any questions, get in touch with us today – we’re always happy to help.