Looking to Remortgage?
Taking out a mortgage is a big deal: it’s a long-term financial commitment designed to last for many years. Your financial situation will undoubtedly change a lot over this period. Thankfully, you don’t have to stay on the same mortgage for this entire time. Once you’ve re-evaluated your finances, you might decide to remortgage.
What is Remortgaging?
Some people think that remortgage always means borrowing more money from the same provider. You might have heard people say, “I’d have to remortgage my house to buy that!” This is misleading, however.
In reality, a mortgage means you stay in the same home but apply for a different mortgage. It could be from the same lender or another one; it’s the deal that changes. You might need to borrow more money, but that’s not necessarily the case.
Why Do People Remortgage?
You’re probably wondering why people would want to go through the process of applying for a mortgage all over again. There are a range of potential reasons, which might include:
- A desire to take advantage of low interest rates
- Their deal is up for renewal, and they want to see what else is available
- They’d like to move from an interest-only agreement to a repayment deal
- A better rate is on offer elsewhere
- They want the ability to make overpayments
- You’d like to borrow more money
Once the initial period of a fixed rate mortgage ends, interest rates can increase. At this moment, many homeowners consider remortgaging and finding a better deal.
What Happens When you Remortgage?
Here are the steps you’ll have to go through to remortgage.
- Your current lender will write to you before your fixed rate period ends. If your new interest rate is higher, you’ll probably think about remortgaging.
- You will ask your lender for a closing balance. This is how much money you’d need to borrow to cover the rest of the mortgage under a new deal.
- You will look for a new mortgage broker. It’s a good idea to discuss your options with mortgage experts, like the team at Prosperity Wealth. We can find the best deals to suit your circumstances.
- You choose which type of mortgage you want, based on the options available. Maybe you’ll choose a repayment mortgage or maybe you’ll go for an interest-only mortgage.
- You will appoint a solicitor or conveyancer if you’re moving to a new lender, and they will support you with the paperwork that this process requires. Then, you’ll go through eligibility and affordability checks.
- You will receive the mortgage in principle from the lender. This will give you an indication of what you’re able to offer.
- You will pay for a valuation which confirms the value of the house matches the amount you want to borrow.
- You will apply for your mortgage! You’ve done this before, so you know what it involves. Your financial situation will be evaluated and if you prove yourself to be a credible candidate, your mortgage will be approved.
- Your solicitor will pay off your old mortgage using money from the new lender. Then, they’ll register your new mortgage with the Land Registry.
How Can Prosperity Wealth Help?
Before you start the remortgaging process, we recommend that you consult the team at Prosperity Wealth. We will help you work through the following questions:
If your new lender going to offer a fee-free mortgage or not? If there’s a fee involved, this could mitigate the savings you enjoy by switching to a new provider.
Do you need to pay an early repayment charge on your current mortgage? If so, you’ll have to pay that before you can change to a new deal.
What is your loan-to-value? If it’s low, you’ll be able to access more mortgage deals. If you’re not sure what your LTV is, then divide the balance of your outstanding mortgage by your property’s value.
Are you ready to apply for a mortgage? You’ll have to face the same checks you did the first time, so if your credit score has worsened since then, it could make it difficult to secure a new mortgage.
We have the insider knowledge required to help you find and secure the right mortgage deal for you. We’ll help you avoid common pitfalls and open your eyes to all the possibilities available, taking your specific circumstances into account.
Remortgaging is a big financial decision. Don’t commit to anything until you’ve spoken to the experts at Prosperity Wealth.
