April 04, 2024
Fees Free Mortgage Team

What is a Remortgage and How To Do It?

April 04, 2024 - Fees Free Mortgage Team

What is a Remortgage and How To Do It?

Whether you’re daydreaming about the possibilities of what your home can become, pondering the potential savings on your monthly payments, or simply curious about the remortgage process, you’ve found the answer at Fees Free Mortgages

We believe that remortgaging is an opportunity for you to achieve your dreams, secure your future, and maybe even save a little along the way. In this blog, we’ll explore the ins and outs of remortgaging and arm you with the knowledge you need to make informed decisions. From understanding the perfect timing for a remortgage, and understanding credit scores, to unlocking the door to a better remortgage deal, we’re here every step of the way.

What is a Remortgage?

Remortgaging is the process of switching your existing mortgage to a new deal, either with your current lender or a different one. It’s like swapping out your old mortgage for one that perfectly fits your lifestyle and financial situation. The reasons behind choosing to remortgage can vary, but often include changes in living circumstances, a need to reduce monthly payments, or a want to release equity from property. 

How Does Remortgaging Work?

So, now you know what a remortgage is, how do you know whether it’s the right move for you? From understanding why you might choose to remortgage, to completing the switch, we’re here to ensure you feel confident and informed every step up the property ladder. 

Review Your Current Situation

Before moving forward, take a look back at your existing mortgage. Start by considering what you like about it and what you don’t. Perhaps the interest rates are higher than what’s now available? Or, you’re on the search for better features, like overpayment facilities or a different type of rate? Whatever the reason, assessing your current deal is your first step to understanding what you want to change.

Shop Around

Next, it’s time to shop around. Just like you’d look around for the best holiday deal, comparing different mortgage options is no different. Here, you’re looking for a deal that not only offers better terms but also aligns with your financial goals, whether that’s saving money, reducing your term, or borrowing more.

Crunch the Numbers

Before you start to make any moves, it’s time to do the maths first. At this point, you’ll consider any costs associated with leaving your current mortgage, like early repayment charges, and weigh these against the potential savings or benefits of your new deal. Remember, the best deal isn’t necessarily the one with the lowest rate but the one that makes the most sense for your financial situation.

Getting Advice

This is where Fees Free Mortgages come in. We understand that every penny counts. That’s why our team is here to offer you personalised advice, helping you to compare deals, understand fees, and find a remortgage solution that ticks all of your boxes. We’ll guide you through the application process and liaise with lenders on your behalf to make things as smooth as possible. 

Application and Valuation

Once you’ve found your perfect deal, it’s time to get your pen out. Your new lender will want to do a valuation on your property to make sure everything’s in order. This part is pretty straightforward, so just sit back and let us answer any questions you might have.

Legal Paperwork and Completion

Now you’re in the home stretch, it’s time to sort out the legal paperwork to transfer your mortgage from one lender to another. But don’t worry, Fees Free Mortgages will help you understand this part, ensuring you make sense of all the legal jargon and what’s happening at each stage. Before you know it, you’ll be set up with your new mortgage.

Why Should You Remortgage?

Remortgaging isn’t just about shifting one mortgage to another, it’s about making the best moves to make your mortgage work harder. From securing a better interest rate to unlocking the equity in your home, the reasons to consider a remortgage are varied.

Better Rates

Why pay more when you don’t have to? With remortgaging, you can snag yourself a lower interest rate. Just as you’d hunt for the best deals to make your money go further, a remortgage can reduce your monthly payments, potentially saving you a bundle over the life of your loan.

Flexibility 

Just as life changes, so do your financial needs. Perhaps you’re earning more and want to take more of that mortgage loan off your back, or maybe you’d like to lower monthly payments to free up some extra cash. No matter the reason, remortgaging can adjust the terms of your mortgage to better fit your current lifestyle and goals.

Unlock Your Home’s Equity

As your home’s value grows, your equity grows with it. By remortgaging, you can unlock this equity, giving you access to a significant lump sum to go towards your home, a dream holiday, or cover your children’s education costs. 

Debt Consolidation

If you’re drowning in debt, then remortgaging can throw you a ring. By remortgaging, you can consolidate your debts into a single, management payment, which often comes at a lower interest rate. In simplifying your finances, you can breathe easier knowing everything’s under one roof.

Escape SVR 

When your initial mortgage deal has ended, you might find yourself on your lender’s standard variable rate. This could be a trap for your financial situation, as it can often be higher than other available rates. So, how do you escape? By remortgaging, you can move on to a deal that’s kinder to you and your wallet.

How Long Does It Take To Remortgage?

Just like how every home is unique, so is every remortgage. Typically, you can expect the remortgaging process to take between 4 to 8 weeks from the moment you decide to go ahead. Why the range? Well, it depends on a few factors, including the complexity of your financial situation, the lender’s efficiency, and how quickly you can gather and submit the necessary documents.

Preparation (1 – 2 Weeks)

Before you jump the gun, there’s some homework you have to do first. This includes reviewing your current mortgage, understanding any fees associated with leaving it early, and getting an idea of your property’s current value. This is also when you should start gathering all the paperwork you need. 

Shopping Around and Applying (1-2 Weeks)

Finding that perfect mortgage deal can take time, but with Fees Free Mortgages we can help make the process smooth and quick. Once you’ve chosen a deal, your next step is to apply. We’ll help you ensure your application shines.

Valuation and Offer (2-3 Weeks)

After you apply, your new lender will arrange a valuation to confirm how much your property is worth. Assuming all goes well, they’ll make you an offer.

Legal Work (1 – 2 Weeks)

There’s a bit of legal legwork needed to transfer the mortgage from your old lender to the new one. If you’re sticking with the same lender but changing deals, this part can be quicker.

When Should You Remortgage?

As the market shifts and your circumstances change, there comes a time when your initial mortgage deal might not fit as snugly as it once did. Timing your remortgage correctly can significantly impact your financial wellness. But when is the right moment to switch?

Before Your Current Deal Expires

Most mortgage deals, especially fixed rates, have an end date. When they finish, you’ll likely be moved onto your lender’s standard variable rate, which can be higher. To avoid paying more than you need to, start looking at remortgaging options 3 to 6 months before your deal ends. 

When Interest Rates Are Attractive

We all love bargains, so it’s important to keep an eye on the market. If interest rates drop, remortgaging to a lower rate can reduce your monthly payments and save you money over time. If you see a bargain, it might be time to grab it.

If Your Home’s Value Has Increased

You might not realise that the roof you’re living under has a fortune tucked away within its walls. If the value of your home has gone up since you took out your mortgage, you might find you’re in a lower loan-to-value band, and eligible for much better rates. This can open you up to new, more favourable opportunities.

When You Want to Overpay But Can’t

While it’s a weight lifted off your shoulders when you pay off a chunk of your mortgage, some mortgages limit how much you can overpay each year. If you’ve come into some money and want to reduce your load but your current deal penalises overpayments, remortgaging can offer a solution.

If You Need to Borrow More

That dream of a new kitchen or extension might seem like a distant reality. However, with remortgaging, you can release some of the equity in your home to fund improvements, potentially increasing its value. By doing so, you can invest in your home’s future and yours.

Your Financial Situation Has Improved

Perhaps you’ve received a higher salary or you’ve paid off a large debt. Great! If your financial health has improved, then you may qualify for better mortgage rates than you did before. 

Can You Remortgage Early?

While you can remortgage early, there might be some costs involved. These are typically known as early repayment charges, which your current lender might charge you for paying off your mortgage early. They’re usually a percentage of the loan and can vary widely.

There are also exit fees to consider, also known as a deed release fee or administration charge, this is what you might pay to cover the administrative costs of closing your current mortgage account.

While you might want to take a shortcut on your way up to the top of the mortgage ladder, weighing any potential savings you might make with a new deal against the costs of leaving your current mortgage early is important. While snagging a lower interest rate might sound appealing, sometimes, the charges can outweigh the benefits.

Can You Remortgage With Bad Credit?

Yes, you can remortgage with bad credit, but it’s the road less travelled, so you’ll need to have the right preparation and possibly a guide. Your credit score is a key factor lenders consider, but it’s not the only one. If your credit history has a few blemishes, don’t lose hope. There are avenues to explore that can lead to a successful remortgage application.

Firstly, transparency about your credit history is crucial. It allows your broker to understand your situation fully and provide the most appropriate advice.

Your lender will be interested to see how you’ve managed your finances recently. If you can show evidence of managing your debts responsibly, despite past issues, it could work in your favour.

The more equity you have in your property or the larger the deposit you can provide, the more likely lenders will be to consider your application. It’s about balancing risk, and a significant equity stake is a positive point.

Some lenders specialise in providing mortgages to those with bad credit. Their products might come with higher interest rates, but they offer a viable route to remortgaging if you’re struggling to get approved elsewhere.

Remortgage With Fees Free Mortgages

Whether you’re looking to remortgage for the first time or you’re a seasoned homeowner looking to optimise your mortgage, understanding the remortgage process is crucial information to have on your way to the top of the property ladder.

Every homeowner’s situation is as individual as the home they live in, and there’s never a one-size-fits-all approach when it comes to remortgaging. That’s where Fees Free Mortgages shines. We take the time to understand exactly what you’re looking for in a remortgage, whether it’s securing a lower interest rate, reducing your monthly payments, or unlocking the equity in your home for that next big life project. We offer personalised guidance for this important financial decision, ensuring you’re making choices that are right for you and your unique circumstances.

But securing the perfect remortgage deal is just the beginning. As your life unfolds and your needs evolve, your mortgage should adapt with you. That’s why we’re committed to providing ongoing support, ready to reassess and realign your mortgage with your ever-changing financial situation. Whether it’s adapting to changes in the market, responding to shifts in your personal life, or simply seeking a better deal, Fees Free Mortgages is here to guide you every step of the way.

Ready to refine your mortgage strategy and unlock the full potential of your property investment? With Fees Free Mortgages, we’ll ensure that your remortgage not only meets your current needs but also supports your long-term financial goals. Reach out to us, and with our expertise, support, and tailored advice, you’ll have everything you need to make your remortgage a success.


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