For most of us, the mortgage is our largest and most important financial agreement. In some cases, the overall monthly payments can become overwhelming, which can lead some to consider remortgaging their home.
Making the choice to remortgage your property can be daunting, but finding a good deal could reduce the monthly repayments and make the most of the value in your home. Find out more about the remortgaging process to make your money situation that little bit easier.
What does remortgage mean?
Remortgaging your property means changing from your current mortgage to a new one and could include increasing the amount you want to borrow against your home. This could be done at the end of your fixed term rate period or anytime during the term of your existing mortgage subject to your circumstances and remortgage objectives.
Remortgaging your property can help to pay for home improvements, such as to add an extension, convert the loft or put in a new kitchen. It can also be a way of paying for a new car or another large expense.
Check out our guide on everything you need to know before remortgaging.
How to get a remortgage
If you’re clear that remortgaging your home is the best way to go, and might save you money in the long run, here’s what you should expect to do as your introductory deal comes to an end and you go onto the agreed-upon SVR ( Standard Variable Rate ).
Ask for a redemption statement
A redemption statement from your current lender will tell you the remaining balance on your mortgage. This is the same amount you will need to borrow when remortgaging.
Find a new deal (or arrange to stay)
An independent mortgage advisor can guide you through the forest of different products, helping you to find the remortgaging option that best suits your unique circumstances and weighing it against the benefits and drawbacks of staying on your existing deal.
Or speak to your current lender about sticking with them. They may be able to match the product from any new providers you are considering or, even better, offer a better deal altogether. What’s more, sticking with your current lender means you wouldn’t have to pay to switch to another provider’s mortgage, or borrow more from a new lender to cover the fees.
If you do decide to move lenders
Any new deal you find would include a breakdown of the costs in terms of additional fees, along with details of how much you’ll pay and for how long.
If you do find a better deal elsewhere than the SVR on your current deal, with lower monthly repayments or even a shorter repayment period for around the same per month, it may make sense to make the move to a new lender. Here’s what to do then.
Find a solicitor
You’ll need a solicitor to handle all the paperwork regarding a remortgage. Your lender may insist you use one of their approved legal advisors or you may be allowed to choose your own. Some mortgage advisors will liaise with the solicitor for you, chasing things up and making sure the remortgaging process happens as quickly and smoothly as possible.
Proving your identity and eligibility
To help speed things up, you’ll be asked to have your documents to prove your financial situation and that you are who you say. These include details of previous addresses, bank statements, utility bills and so on.
Mortgage in Principle
You’ll then receive a Mortgage in Principle, or MiP, from your prospective lender. This illustrates how much you can expect to borrow on your new mortgage.
There’s more to this process, depending on whether you’re remortgaging to buy a new property or are simply staying put. But once you’ve got the new offer in hand, and the new mortgage is approved, you can breathe a sigh of relief, safe that you’ve met a new milestone in life.
How long does the remortgage process take?
On average, the remortgaging process can take anywhere between four to eight weeks from the time you submit your application.
How much does it cost?
There are some fees you will need to pay to remortgage your property. Some mortgages come with charges like exit fees, meaning you’ll have to pay a fee for leaving the mortgage. If your current mortgage isn’t due to end, this charge could run into thousands of pounds. Double check your mortgage documents from your current lender to check how much you may need to pay.
You may even have to pay the new lender you wish to move your plan to. Often, there are application fees, charges for the remortgage valuation process and solicitor fees. To avoid unexpected costs, check with your new potential provider to find out exactly how much it will cost for you to remortgage your property.
Before you make the final decision on remortgaging, it’s important to ask yourself some searching questions. A remortgage usually constitutes a larger loan against the value of your home. Do you really need to do it? Is waiting for a year and building up some savings first a possibility? And most importantly, have you got a clear budget in place that shows you that you can afford the repayments?
Visit the Know How blog for more around remortgaging.