A remortgage is simply when you take out a new mortgage on a property that you already own - either to replace your existing mortgage, or to borrow additional money against your property.
The main reason to remortgage is to save money.
As a mortgage is likely to be your biggest financial commitment the money saved each month can be significant.
Read on to find out more or click a jump link below to skip to a chapter that interests you.
Case Study #1
Andrew’s fixed term had expired, and he was on the lenders standard variable rate of 4.24%, with repayments of £1184 per month.
By switching Andrew on to another fixed rate product with the same lender his repayments dropped to £886, and just 1.41%.
This means a huge saving of £298 a month and £3576 a year!
There was no paperwork involved so it was quick, easy, and most importantly stress free.
When speaking with our client’s their top reasons for not remortgaging and paying thousands a year more in unnecessary interest costs are:
- They simply don’t have time to look at re-mortgaging.
- Their circumstances have changed, and they worry that they would no longer be eligible for a mortgage i.e. they have just changed jobs/in-between jobs/lower salary/family changes.
- They didn’t know they could re-mortgage.
- They are still tied into a fixed rate deal, so will have an early repayment fee if they leave the term early, and therefore would not save money.
- They are planning to sell the property soon, and don’t want to take on a new fixed rate term.
- It costs too much.
Let’s look at these reason’s in more detail:
1. Remortgaging can be surprisingly straightforward and quick.
If you switch lenders the process is about 4 weeks in total.
Most lenders will offer their own panel conveyancer free of charge to make the transaction flow more quickly.
Remortgages are also much easier to get approved as you have a history of paying a mortgage.
Underwriters like this and it fills them with confidence, it usually takes half the time to get approved vs a purchase. (about 1 week).
As your mortgage advisor we will do all the hard work, make sure we find you the cheapest product possible and liaise with the lender throughout, making it as stress free as possible for you.
2. Most lenders will allow existing clients to switch their product to a more favourable rate without having to supply any additional paperwork, so it doesn’t matter if your circumstances have changed!
As your mortgage advisor we can advise you on this and complete the switch to the best product for you.
3. All banks rely on existing clients to be unaware of when their fixed term ends, or simply forget about it. (although they do have to notify you within 6 months of this ending).
This is when they make the real money, i.e. when you leave your low rate to go onto a much higher rate - often over 4%.
Make sure you check your paperwork and look for the fixed rate term end date.
We can apply for a remortgage within 6 months of this date, to get you the best possible interest rate out there now!
4. Surprisingly even if you do have an early repayment fee in force it may still save you more money in the long run, by switching and paying this fee.
Case Study #2
Philippa was stuck on a 5-year fixed rate and had 2 years to go.
The rate she had tied into was high because she had a poor credit score at the time she applied.
Her interest rate was 7.49% and she was paying £1388 a month.
Her early repayment fee was £4000, so she was going to remain on this term until it ended to avoid this fee.
However, she was eligible to switch lender and go on a 1.54% rate, lowering her repayments to just £689 a month.
Over 2 years this saving amounts to a whopping £16,776!
Even after paying the £4000 early repayment fee Philippa has saved £12,776!
Most lenders will allow you to port the mortgage, i.e. take it with you to a new house when you move, so don’t assume you are now ‘stuck’ for another 2 years.
You will need to meet the lenders criteria at the time you request the port, so make sure you speak to your mortgage advisor to discuss your options.
It really doesn’t have to cost anything to remortgage!
Most lenders offer a £0 set up fee, a free valuation and free legal fees to take care of the conveyancing side.
After all, they do want your business and want to make it enticing as possible to switch.
Combined with our no fee offer on all re-mortgages, it won’t cost you a penny!
Get In Touch!
Now we have broken down the main concerns and shown you how easy it is to re-mortgage, don’t give your lender a single penny more in additional interest, look at remortgaging today!
Contact us today to arrange an initial consultation with an experienced mortgage advisor.
IMPORTANT: This article provides an overview of investing in property the UK, it does not constitute advice and should not be used to make financial decisions. You must always seek advice from independent financial specialists when making major financial decisions.