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Remortgage


Remortgaging is likely to be the type of mortgage you do most. You may have to pay an early repayment charge to your existing lender if you remortgage.

Whether this is your first time remortgaging or your 5th, there is always information you will find useful.


So, what is a remortgage?


For those who aren’t sure, the best analogy to use is a phone contract. Most of us have had one at one point in our lives and understand the idea. You have a phone, on contract for typically 2 years, once that deal ends you usually pay a lot more so you go elsewhere and get a new more competitive deal…simple enough right?

Well, remortgaging a property isn’t enormously different in terms of concept.

When your deal ends, regardless of it’s a fixed rate that’s ending or a variable rate, you will almost always revert onto what is known as the lender’s standard variable rate ( SVR). The SVR is almost always significantly higher than your original rate so a majority of people remortgage to ensure they don’t pay the SVR and save money. The process in general is far simpler than a purchase application. Your Home may be repossessed if you do not keep up with the repayments on your mortgage. So, what do you need to consider?

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Time

Even though the process is quicker, it can still take time.

We recommend starting the process at least 6 months before your current deal ends so you have plenty of time to spare. You will receive your mortgage offer before the expiry of your current deal and have it waiting to start once your current deal ends. That being said, sometimes your existing lender will allow you to switch earlier than normal if you chose to remain with them. It is sometimes a great option as it makes it quicker ( almost instantly) but they aren’t always the most competitive. Being an existing client doesn’t automatically mean the cheapest deals.

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How do I know how much my home is worth now?

All lenders and all applications will have a valuation.

Most of these are free with a remortgage so the lender will be able to tell you how much they believe your property to be worth. However, they will want you to have an idea of it beforehand. Therefore, if you really have no clue, Zoopla or your local estate agent are always good places to start.

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Loan to value

Do you know how loan to value works?

Typically, when you remortgage, your property value has risen and your mortgage has reduced and therefore you have a lower loan to value which means you can get a better deal. But do you know how loan to value works? It is rounded up in 5’s. The highest loan to value deals are 95% and the lowest tend to plateau out at around 60%. If your loan to value is 70.01% you would be rounded up to 75% loan to value. However, if you were to pay off the 0.01% by overpaying, you could get a 70% deal and obtain a better rate.

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Borrowing more

Home improvements, holidays and to purchase further properties.

Ultimately a mortgage is a loan secured against your property and you, therefore, want to avoid making the mortgage bigger by borrowing more if you can avoid it as you are putting your property ( security) at risk. That being said, in the right circumstances, you have the option to borrow more on the mortgage if you wish. This can be for several reasons but the most popular is for home improvements, holidays, debt consolidation and to purchase further properties. You should always seek advice if you wish to do this and we would be happy to oblige. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. If you are looking to borrow more to buy a new property and then let your current property out, please refer to our buy-to-let tab under ‘let-to-buy or consent-to let’

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Term

The shorter the term, the less interest you pay.

We all want to be mortgage-free as quickly as possible and the quickest way to do this would be by amending the term. The shorter the term, the less interest you pay, and the quicker the mortgage is paid off. We always advise you do this where possible. Of course, it means a higher payment so we can work together to see if this works for you. But, if we remortgage you onto a lower rate you may find yourself in a position where you potentially pay less than what you are currently and on a lower term, bringing you closer to being mortgage-free!