Remortgages
We make remortgaging as simple as possible…..
A remortgage is essentially no different to a normal mortgage, with one crucial difference - you are not buying a house. All you are essentially doing is taking out a new mortgage to replace the old one, while shifting your debt from one lender to another.
Remortgaging isn’t nearly as much hassle as most people think – particularly if you use our online enquiry form when one of our dedicated mortgage advisors looks after your remortgage for you. In addition you will be appointed a dedicated case manager to ensure the process goes as smoothly as possible and to keep you updated every step of the way.
Why switch your mortgage?
In today’s competitive market, many borrowers choose to switch their mortgage every few years in order to take advantage of the new rates on offer. However, a remortgage also allows you to release the equity that has accumulated over the years. Equity is the difference between your current mortgage and your property's value.
If you consider how house prices have increased in recent years, this could be a substantial sum. The extra cash you release could be used for any purpose such as a wedding or your child’s university costs. It might even be enough for you to consider buying another property to rent out (or using as a deposit for a buy to let mortgage).
You can remortgage for any of the following reasons
- Debt consolidation to reduce your monthly outgoings*
- Raise money to buy another property
- Raise money for a big purchase
- To pay unforeseen bills
- Home improvements
- Or simply move to a lower interest rate
There are things to consider before you change your mortgage:
Do you have an early repayment charge? Your mortgage may have one, especially in the early years and if you are still in the period of a special deal mortgage, such as a discounted, fixed or cashback mortgage. Are there other charges? Are the rates competitive? Your fully authorised broker (make 100% sure that they are!) will be required to take everything into consideration if they are to advise you to change to a new mortgage.
Mortgage Options
Repayment Mortgage
Monthly payments will gradually pay off the amount you owe (the capital) as well as paying the interest charged to you for the loan. Provided you make all these agreed payments, your loan will be paid fully by the end of the mortgage term.
Interest-Only Mortgage
Monthly payments cover the interest on the loan only, but do not pay off any of the capital. Separate arrangements need to be made to pay into a savings or investment scheme. This needs to build up a lump sum to pay off the mortgage at the end of the term. You have to make sure you have enough money to repay the mortgage at the end of the term; otherwise you could lose your home.
There are things to consider before you change your mortgage:
Do you have an early repayment charge? Your mortgage may have one, especially in the early years and if you are still in the period of a special deal mortgage, such as a discounted, fixed or cashback mortgage. Are there other charges? Are the rates competitive? Your fully authorised broker (make 100% sure that they are!) will be required to take everything into consideration if they are to advise you to change to a new mortgage.
Interest Rate Change Arrangement
Whether you choose a repayment or an interest-only mortgage, you need to consider the different types of interest rate options available to you.
Remember, what looks like a cheaper mortgage today may not prove to be so in the longer term. Ask what happens after any special deal ends.
Standard Variable Rate Mortgages
Monthly payments go up or down when the lender's mortgage rate changes.
Tracker Mortgage (variable interest rate mortgage)
A tracker mortgage interest rate is a set amount above or below the Bank of England or some other base rate. It 'tracks' changes in that particular rate.
Discounted Interest Rate Mortgage (variable interest rate mortgage)
With a discounted interest rate mortgage your payments are variable, but are fixed at less than the lender's standard variable rate for a set time. At the end of this period, you are usually charged the lender's standard variable rate.
A Mortgage with Cashback
A cashback mortgage is where you receive a sum (usually between 3 and 5 percent of the amount borrowed, but sometimes a flat figure) shortly after you take up the loan. Normally some or all of the cashback is repayable to the lender if you repay the mortgage in the early years.
Variable Rate Mortgage - Good or Bad?
Good: You could benefit from any reduction in the current interest rates. This may mean your monthly payments go down. You usually have flexibility to overpay without any penalty. This assumes that there are no restrictions on making overpayments and early repayment charges do not apply.
Bad: When interest rates rise, your monthly payments could go up. With discounted mortgages, you need to think about what your monthly payments will be at the end of the discounted period, including any potential increase in interest rates.
What does loan-to-value (LTV) mean?
Loan to Value refers to the loan as against the value of a property expressed as a percentage. For example, a mortgage amount of £90,000 against a property value of £120,000, the LTV would be 75%.
Broker Fee Agreement
There may be a fee for Mortgage Advice; the amount will depend on upon your circumstances but we estimate it to be 0.5% of the mortgage sum.
*IT IS RECOMMENDED THAT YOU THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME, YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
