Remortgaging your property is a serious step to take, but it can be an excellent way of making the most of the value in your home.
What does remortgaging mean?
Remortgaging means, either changing to a new mortgage or increasing the value of your existing home loan. Many people remortgage to pay for home improvements – to add an extension, convert the loft or put in a new kitchen, for example. It can also be a way of paying for a new car or the holiday of a lifetime.
The safest use for money borrowed against your home is generally is to pay for home improvements, as this will most likely increase its value. But by using mortgage borrowing for other big purchases, you will lose equity, which can be dangerous, particularly in a depressed housing market.
The other use for the remortgaging process is when a fixed-term mortgage comes to an end. In this case, you can either choose to stay with your current provider or see if other providers can offer you something better.
If you have decided that remortgaging is a good idea for you, here are a few essential steps to make the process simpler.
Do your homework
For most of us, our mortgage is the biggest loan we will ever take out – but the deal does not need to stay the same for the whole term. When a fixed-term mortgage comes to an end, it may not make sense to stay with the same provider. Make sure to shop around and see what terms other lenders can offer you.
Talk to your current lender
Having had a look at the deals available, it may be worth talking to your current lender and give them the chance to match or better them.
Get independent advice
An independent mortgage advisor can guide you through the forest of different mortgages, helping you to find the one that suits your circumstances best. They’ll be able to tell you what to expect from the application process, so consulting one may be a good idea.
Find a solicitor
You’ll usually need a solicitor to process the remortgage – your lender may insist on you using 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 remortgage happens as quickly and smoothly as possible.
If you’re planning on remortgaging, it’s important to ask yourself some searching questions if it means taking out a bigger loan on 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?