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HOW DOES REMORTGAING WORK?
Remortgaging is where you take out a new mortgage with a new lender on a property you already own and have a mortgage on. The new mortgage takes the place of the mortgage you originally had on the property.
Who May Want to Remortgage?
You may want to remortgage if:
- The introductory deal on your current mortgage is due to end soon andyou’d like to avoid being transferred onto your lender’s SVR (standard variable rate)
- You want to consolidate multiple other debts
- You need money to fund home improvements
- You have a large expense coming up – like a wedding or school fees, or you want to help your children with a deposit, etc.
Remortgaging may be unsuitable for you if:
- You need a small mortgage below £25,000
- You need to borrow a very high percentage of your property’s value
- You took out your current mortgage very recently
- Your mortgage has high ERCs (early repayment charges)
What does remortgage mean?
Remortgaging is the process of switching from one mortgage lender to another but staying in the same property. The most common time to remortgage is when your current product has come to its end.
We’ve listed some of the main reasons why people remortgage below.
To Raise Money
To Save Money
However, before you steam ahead and remortgage, you may want to consider contacting your current lender first. If you’re on a fixed or discounted rate, your lender will usually write to you a few months before it ends and you’re transferred onto their SVR. They’ll ask you to contact them or your broker about your options. Your lender will want you to remain as a borrower with them, so they’ll give you the opportunity to choose from better rates they offer to existing customers – these are often not the same as the products offered to new customers. This could help you save money on your monthly repayments or repay your mortgage sooner.
In the case that your lender doesn’t have decent or suitable deals on offer, you should consider remortgaging and switching your mortgage to another lender. However, before you make any final decisions, you may want to speak to a mortgage broker. We can help you compare deals.
To Consolidate Your Debts
We recommend that you think carefully before remortgaging to pay off your current debts. It can help you organise what you owe and meet payment deadlines, however mortgages are over longer periods of time than credit cards and personal loans so you may end up paying more overall, despite the fact they usually come with much lower interest rates.
Nonetheless, sometimes it really could be the best option. It’s important to seek advice before you commit to consolidating your debt. You’ll need to make sure that you can keep up with the repayments, otherwise you risk the repossession of your home.
To Avoiding Moving Home
When Can You Remortgage?
You can start to organise your next mortgage up to 6 months before the end of your existing rate. Mortgage offers can take 3 – 4 weeks to process and the legal work can take 2 – 3 weeks. The new mortgage offer itself is often valid for up to 6 months so, if everything is completed and ready to go early, you can instruct the solicitor to wait until any early repayment charge period with your current lender has expired before proceeding. It’s often worth looking for better rates prior to your current deal finishing, otherwise you could end up paying more than you need to – specifically if the new mortgage isn’t ready to go when your current deal ends and you’re moved onto your lender’s SVR.