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Remortgaging – when and how to get a new mortgage deal
There are lots of good reasons to get a new mortgage – to reduce your monthly payments, get a different type of mortgage or borrow more money. A Mortgage Broker like Fancy a Mortgage can make it painless and worthwhile.
What is remortgaging?
Remortgaging just means getting a new mortgage, often with a new mortgage provider. If you stay with your existing lender but get a new mortgage deal, it can be called a Product Transfer.
There are lots of reasons you might want to get a new mortgage.
Reasons to remortgage
The situations where you might remortgage include:
- Your current deal, especially a fixed rate period, is ending soon.
- You want to borrow more – e.g. for home improvements or to pay debts.
- You want to change from an interest-only to a repayment mortgage, or vice versa.
- You’re worried about interest rates going up. A fixed rate mortgage will stop rate rises putting up your payments.
- Interest rates have dropped, so you’re remortgaging to get a better rate.
- Your home has gone up a lot in value. That gives you a better loan-to-value ratio, which might mean better rates.
- You want to overpay but this isn’t possible on your current deal. Overpaying can help you pay off your mortgage early.
- You want a more flexible mortgage.
When is remortgaging not a good idea?
There are some circumstances when remortgaging might not be advisable:
Your financial situation has changed
If your income has decreased you may not find a mortgage offer as good as your current deal.
You don’t have much more to pay
If you just have a few thousand pounds left on your mortgage, changing deals won’t change your payments much. You could remortgage to borrow more money, however.
Your current deal has a high early repayment charge
Lots of mortgages will charge an exit fee if you end it early, typically 5% of the mortgage balance. It’s usually worth waiting until the end of the term.
Your equity is small
If property prices have dropped or you haven’t paid off much of your mortgage yet, you will have a high loan-to-value. It could mean you can’t attract very favourable rates, and are better off staying with your current mortgage.
You’ve had credit problems
If your credit score has fallen since you took out the mortgage, it could be difficult to get a competitive deal.
You’re already on a good rate
If your current mortgage is good value, whether it’s a variable or fixed rate deal, don’t remortgage.
What happens if I don’t remortgage after my deal expires?
When you’re nearing the end of a fixed rate mortgage term, it’s time to shop around. With most fixed deals your initial rate lasts two, three or five years. After that, the mortgage lender will put you on their standard variable rate (SVR). This rate is usually expensive, which will put your payments up.
How can I improve my chances of a good remortgage?
If you have paid off a good amount of your loan and your financial circumstances are broadly the same, getting a remortgage shouldn’t be difficult.
Check your credit and make sure you have up to date ID, such as a passport and driving licence. It’s also helpful to collect recent payslips, bank statements, utility bills and your P60.
What are the fees for remortgaging?
You might need to pay an Arrangement Fee, which is either a set amount or a percentage of the loan. You can pay this upfront or add the cost to your mortgage. Sometimes there is also a Booking Fee of £100 to £200.
There are usually legal fees too, although they’re free with some lenders. With others you might get cashback which you can put towards the legal costs.
Can a Mortgage Broker help me remortgage?
Getting the right remortgage deal for you means doing lots of research. At Fancy a Mortgage we do all the hard work for you. We will help you save money by finding the most competitive deal for you.
Whatever you want to achieve with your remortgage, we can help. We’ll talk through all the options with you so that you can make an informed decision.
Fully authorised by the FCA and registered in England, we make it easy and stress free to get a new mortgage deal.
Your home may be repossessed if you do not keep up repayments on your mortgage.