Are you coming to the end of your fixed-rate mortgage deal and wondering what will happen if you don’t remortgage? In this helpful guide, we’ll explore why remortgaging is important and how to find the best deals.
Why Do People Remortgage?
When your deal ends with your existing lender, the rate will revert to the mortgage lender’s standard variable rate (SVR), which is considerably higher than your interest rate. This means you’ll see a sharp increase in your monthly mortgage payment. Remortgaging is advised to avoid this situation.
How Does Remortgaging Work?
What is a remortgage? When you started your current mortgage, you were likely offered a low-interest rate as an incentive for the first 2 or 5 years. However, good things come to an end, and your aim should be to find the best remortgage deals to avoid an increase in your rate and monthly payments. The average timescale for a remortgage is around 8 weeks, but you can help speed up the process by being organised with your paperwork.
What Information Do You Need to Provide to Remortgage?
The mortgage broker will need basic details such as your full name, address, and date of birth, as well as identification (usually a passport or driving license), latest 3 months payslips and bank statements, and a credit report.
How Early Can You Remortgage Your Home?
It’s best to start your remortgage process 6 months before your existing mortgage rate ends to avoid a rushed remortgage. A remortgage takes an average of 3 months from start to finish, so don’t leave it later than 3 months before your existing mortgage deal ends.
Will You Need to Pay an Early Repayment Charge?
Your current lender could charge you up to 3% of your mortgage loan as an early repayment charge, so you should avoid paying it unless it makes complete financial sense. A good mortgage broker can help you avoid this.
Will You Have to Pay Any Fees to Remortgage?
When you remortgage, there can be various costs and fees payable, including legal fees, surveys, and arrangement fees. However, your mortgage broker can search the whole market for the best remortgage deal with no fees and the lowest mortgage payments.
Why do people remortgage?
If you’re wondering why you might consider remortgaging, here are some of the main reasons:
Avoid an increase in your monthly mortgage payment
As your existing mortgage deal comes to a close, the interest rate will likely move up from its fixed-rate to the lender’s SVR (standard variable rate) – which is often higher than what you’re paying now. Consider remortgaging for a new interest rate and avoid this increase in payment while keeping your instalments low.
Find a better interest rate or mortgage deal
By remortgaging, you can potentially benefit from increased savings on interest payments in the long run – particularly if rates have decreased since your original loan. After all, why pay more than necessary when you could use this opportunity to make substantial gains?
Release equity from your property
Can I remortgage to release equity from my house? If you have generated equity in your home and are seeking a way to free up funds, remortgaging may be the perfect choice. It allows you not only to access this equity but also to use it for debt consolidation or home renovations.
Switch from a variable rate to a fixed rate
For greater peace of mind and budgeting capability, remortgaging to a fixed-rate deal is the way to go. You’ll enjoy the certainty of knowing exactly how much you’re paying each month with no surprises!
Reduce or extend the term of your mortgage
Remortgaging can help you make the most of your mortgage either by decreasing monthly repayments with a longer term or paying off sooner through a shorter one. Whatever your financial needs may be, remortgaging is an effective way to get what you want out of it.
Switch from an interest-only to a repayment mortgage
Switching to a repayment mortgage can help you pay off your capital and interest more quickly while building up equity in your home at a faster rate.
Change your current lender or current mortgage deal
By remortgaging, you can switch your current lender or product to find a better deal and save money. Doing so could help you reduce the amount of money spent on interest and fees, allowing you to save significantly in the long run.
Fund the purchase of a second property
Unlocking the equity in your current home through remortgaging is a great way to fund the purchase of a new property. It can give you an opportunity to expand your portfolio and invest in buy-to-let properties, allowing you to earn more profit from real estate investments.
Pay off your mortgage early
By remortgaging to a new lender, you can pay off your mortgage quicker without any extra fees. The best part? You could opt for a lower-term loan or better interest rate – both of which will help minimize the amount of money spent on interest payments during the life of your mortgage!
Take advantage of incentives
By remortgaging to a new mortgage lender, you can capitalise on stamp duty land tax cuts and other savings opportunities that may be available. This will make it easier for you to purchase your new home while also cutting costs in the process!
What’s the Best Fixed-Rate Term to Choose for Your Remortgage?
The best fixed-rate term to choose for your remortgage will depend on your personal circumstances. A rough rule of thumb is that the larger your loan-to-value (LTV), the shorter you want your remortgage rate. If you have a lower loan-to-value, usually under 60% LTV (learn about remortgage valuation here), then it might be worth considering a longer fixed term. Another important thing to remember is if you’re considering moving in the next couple of years and you take a longer term of rate, then you need to be certain your mortgage is portable. A mortgage broker can give you good advice for the best deal.
How to Find the Best Mortgage Deals with No Fees
With over 90 banks and building societies in the UK offering 14,000+ different mortgage products, it can seem overwhelming to find the best rates on a new mortgage deal. The majority of mortgages in the UK are arranged with the help of a mortgage broker. Look for a ‘whole of market’ mortgage broker who can search every bank and building society to find you the best mortgage renewal deals with no fees.
Do Mortgage Brokers Charge a Fee?
While some mortgage brokers charge a fee, many are fee-free. To find a fee-free broker, Google “fee-free mortgage broker near me” and check their website and reviews.
How to Find an Amazing Mortgage Broker
YesCanDo Money is a family-run, no-fee mortgage broker that has access to the best deals from all lenders. They’ll carry out research into the best mortgage lender for you and submit your mortgage application on your behalf. YesCanDo Money is one of the highest-rated mortgage brokers in the UK with hundreds of 5-star Google reviews. They also use WhatsApp, making it easy to communicate with them throughout your remortgage process.
In conclusion, remortgaging is important to avoid a sharp increase in your monthly mortgage payment. To find the best new mortgage deal on mortgages with no fees, work with a whole-of-market mortgage broker. Start your remortgage process 6 months before your current mortgage rate ends, and avoid paying any unnecessary fees or charges. With the help of a good mortgage broker like YesCanDo Money, you can find the best remortgage deal for your personal circumstances.
Is it necessary to remortgage?
Remortgaging isn't always necessary, however, it can help you reap great rewards if you're looking to reduce your monthly payments or access the equity in your home. When your existing mortgage deal is up for renewal, make sure to evaluate all of your options thoroughly and consider remortgaging as a potential route - you might just find that this could be an excellent way to secure a better rate!
What are the reasons for remortgaging?
If you're considering remortgaging, there are a number of compelling reasons to do so, such as avoiding an uptick in your monthly payment, searching for a competitive interest rate or unlocking equity from your house. Additionally, you might switch from a variable-rate loan to a fixed one and reduce or extend the term of your mortgage - all great options worth exploring!
Is remortgaging risky?
Although remortgaging can be accompanied by certain risks, like early repayment charges and the potential for devaluation of your property that could affect equity, with proper research, a credible mortgage broker and wise decision-making you can drastically reduce these dangers. Ultimately it's up to you whether or not remortgaging is the right choice - just make sure all options have been thoughtfully considered before making any commitments!