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What is re-mortgaging?

Re-mortgaging is when you secure a new mortgage on a property you already own. It can be with the same lender, in which case it would be a product transfer, or with a completely new lender.

What are the reasons and benefits for re-mortgaging?

There are many reasons and benefits for wanting to re-mortgage your property.  You may want to secure a better interest rate if your current deal has come to an end.  Or you may be on a standard variable rate with your current lender, which gives minimal security with the risk of interest rates rising.  Do you want to release equity from your home to carry out home improvements or pay off existing debts?

In some cases, the interest rate may be lower than when you took out your original mortgage, in this situation it would make sense to try to secure a better rate. You may find yourself with some spare money which you want to pay off your mortgage, only to find that your current lender won’t allow you to do so, and finally with interest rates rising you may feel now is the time to see if you can secure a better deal, which will save you money in the long term.

What would a lender take into account when considering your application?

Each lender has its own criteria, but a typical lender will take the following into account when considering your application:

• Employment status
• Dependants
• Income
• Debts
• Committed expenditure
• Disposable income
• Credit rating

All of these and more are investigated prior to a mortgage offer being processed. The reason for this is to satisfy the lender of your ability to manage the mortgage payments along with all other financial commitments.  The lender needs to be comfortable they are making the right decision by lending you the money.

When is the best time to re-mortgage?

The best time to re-mortgage is when your current deal is due to finish, therefore avoiding any early repayment charges.  You can begin this process six months before your current deal is due to expire.  Whilst this is the ideal time, you can, if you wish, review your mortgage at any point within your agreement, but when doing so make sure you take into consideration any costs you may incur. You may find that the costs incurred outweigh the savings made from switching to a new rate.

Should I stay with my current lender or source a new one?

Staying with your current lender is a straightforward process as you are simply transferring to a new product, this will save time and money.  However, don’t dismiss looking at other lenders as they may have a more competitive rate, or a product better suited to your needs.

How long does the process take?

You can begin looking six months before your current deal ends and the process can take anywhere from six weeks to several months.

What costs do I need to consider?

Remember to consider all costs when moving to a new lender.  You need to take into account costs such as early repayment charges on existing mortgage, property valuation costs, conveyancing costs and a potential broker fee.  However, many re-mortgage deals have no product fees and offer a free legal and valuation service.

If re-mortgaging is something you would like to consider, please give us a call on 01228 711888 or if you are calling in Scotland give us a call on 01387 270340 to speak to one of our expert advisers.