Remortgages

A Remortgage is a change of mortgage from one lender (or product) to another lender (or product), with the aim of securing a more competitive or appropriate deal, raising extra money, paying off part of your mortgage or maybe to consolidate existing debts. Many mortgage lenders offer highly attractive incentives to pull customers away from other competing lenders. For example, attractive interest rates, free valuations or free legal fees. With regular independent mortgage advice you may be able to save thousands of pounds over the life of your mortgage.

What is remortgaging

When you remortgage you're not buying a new home.
It's about switching your mortgage to another mortgage lender, in order to lower the amount you're paying on your mortgage.
In short a remortgage is about saving money.
It is of particular relevance if the value of your home has risen.
Remortgaging usually involves changing your mortgage lender, though not necessarily.
Most lenders offer the sort of special deals you'll be looking for only to attract new customers into their web and deliberately exclude existing customers. However you may find that your lender offers you a better deal so as not to lose you. (This would still be remortgaging).

How much can you save

If you're paying an interest rate of say, 7.5% on a £100,000 loan and you can change your mortgage to another, which charges you 7% you'll be saving £31 per month. That is £372 a year or £9,300 over a 25 year mortgage term. (If invested instead this could be worth considerably more). And that's only for one half of a percentage change. The main thing to know is the cost of the penalties. If you will have to pay for giving up your old mortgage. A quick call to your mortgage provider should tell you this. Just have your reference number to hand. Similarly a quick call to us and we will show you how much your new mortgage will cost. It is easier to do it this way than with a calculator because there are so many variables involved.

Why isn't everyone Remortgaging

Remortgaging is fairly easily to research.
However there's a lot of ignorance of the sort of savings possible and, of course, our old pal consumer inertia plays its happy role.
That's not too surprising considering the hassle most of us remember about the process of getting a mortgage in the past.
Even if they want to reduce their mortgage payments, some of us, this writer included, signed up to deals where we didn't think the leaving penalties would be a problem.

Now I'm tied in and it wouldn't be worthwhile remortgaging, paying the penalties and leaving - yet

How Easy is Remortgaging?

In the bad old days remortgaging was a complicated process. You had to shop around and sort through the miasma of the mortgage lenders' jargon.
Now however, lenders are "up for it", desperate to steal customers from their competitors and will offer deals deliberately aimed at doing this.
All you have to do is give your details to a mortgage broker or IFA and see if they can come up with a better deal.
Shop around to make sure you're getting the best remortgaging deal possible. If it's going to save you money take your hands out of your pockets, straighten your back and sign the lenders application form - which the broker / IFA will have sent you.
It's easy to put this off. Who can blame you. Filling in mortgage application forms aren't the best fun you'll ever have.
But they're also fairly manageable and every day you delay in completing it is costing you money
You can start the ball rolling on this or any other independent mortgage website by submitting your basic details. These will go to a broker who'll quickly send you an offer.
The key is to shop around. We recommend you always get three quotes when buying any financial product.

How do you choose the best deal
The bottom line is you're looking for a mortgage with a cheaper interest rate.
However you have to keep your eye out for the usual catches.
Watch out for tie ins, either with insurance to go with the mortgage, or the penalties, that will hang like a noose around your neck to make you stay with the lender after the special rate has expired.
Obviously you don't want to switch mortgages to supposedly save money only to find yourself trapped in an unnecessarily expensive deal.
These drawbacks should be taken into careful consideration - but they're easily checked.
The best remortgaging deal may be one that doesn't offer the lowest interest rate but doesn't tie you in.

Costs of remortgaging

You will usually have to pay for a Valuation/Survey and solicitor's fees. However, some lender's will pay these for you as an incentive
In addition, arrangement / application fees charged by your new mortgage lender may cost anything from a couple of hundred pounds to £500 or more.
In all, these costs could add up to £1000 and - like the tie ins- could cancel out the savings you're making by switching mortgages.
It's a simple question of adding it up. A broker or an IFA would probably do this for you.
Some mortgage lenders will pay all or some of these costs for you in order to get your business.
They may charge you more interest than those that don't but it's all part of the equation you'll have to work out.

Remortgaging Tips

Because you may be changing your mortgage. The key is to shop around.