Whether it’s a new bathroom in your semi-detached or a new wing to your stately home, making your home more attractive will add to your quality of life and, most likely, the value of your property.
The other big reason to remortgage is to take advantage of the increasing choice that comes with a booming housing market. Mortgage lenders are offering a huge range of products, so there’s never been a better time to consider making a switch.
Whether you’re looking to increase your borrowing with your current lender, or to switch to another mortgage company with a better deal, here are our top tips to consider.
Improve or move?
Liberating cash to invest in home improvements is a great idea, but do your homework before you apply. Get reliable estimates for everything including architect’s plans and building regulations inspections, and draw up a realistic budget.
Take property sites with a pinch of salt
Many of us get regular updates from property sites showing the value of our homes shooting up. But remember that these are average estimated figures. Don’t assume that your lender will offer you up to the value of these sites new estimate - they will take their own valuation.
It pays to switch
If you’re thinking of switching to a new mortgage, keep an eye out for the expiry date on your fixed term mortgage. If you don’t switch before that happens, you’re likely to be put onto the lender’s Standard Variable Rate – which may not be the most competitive option.
Compare what’s out there
The mortgage world is a bewildering jungle of different products, so before you pick a new provider, have a look through one of the comparison sites.
Before changing mortgage providers, you’ll need to look carefully at your existing lender’s exit fees and any other charges that may apply. There’s no such thing as a free mortgage switch – but it may still be the most advantageous option.
Staying with your existing provider but choosing a different mortgage from them may work out to be the best and easiest option. You may also avoid some charges for leaving your current lender.
As well as paying to leave your current mortgage, there is also likely to be a cost involved in applying for a new one – and sometimes these are variable based on the value of your home. There are some fee-free mortgage deals, but they are likely to have higher interest rates.
It’s good to talk
Be prepared to spend a lot of time on the phone when you decide to switch your mortgage provider – there will be lots to sort out and you’ll be dealing with two lenders. In some ways, switching mortgages is more complex than arranging one in the first place but just keep thinking about the money you’ll save in the long run.
Avoid the hard sell
When you’re approaching lenders about remortgaging, they’ll try to sell you all kinds of products from payment protection to buildings insurance. All of these are available (possibly cheaper) from other suppliers and you don’t have to buy one linked to your mortgage. Beware of the hard sell.
Get out of debt free?
Remortgaging to pay off debts may seem like a good option, with interest rates low. But be warned – a mortgage is still a loan, albeit over a longer term. Repaying debt in this way takes far longer and can cost more. Look at other ways of getting rid of the debt first.
This is a great time to remortgage, but as we’ve pointed out in this basic introduction to the subject, there’s a lot to consider. Before you take the plunge, take a look at our remortgaging guide which should help you avoid the pitfalls.