In principle, a remortgage means to switch your mortgage from one mortgage lender to another. This is achieved by paying off your current mortgage borrowing sum, with the proceeds of a new mortgage. You can also remortgage with your current lender.
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In most remortgage cases, there are costs attached to moving your mortgage from your current lender to another. These costs are normally in charges. Look out for the following charges when you are considering remortgaging your property:
- Early Repayment Charge
- Arrangement Fee
- Booking Fee
- Product Fee
- Reservation Fee
Although the above will cover most charges, the list is not exhaustive so please check what charges apply to their products with each mortgage lender.
You will also need to consider the cost of a new survey and valuation on your property, which you will have to pay. However, keep an eye out for those mortgage lenders that offer these for free when you remortgage through them. For example, Clydesdale Bank will pay your legal and valuation fees.
Remortgaging offers you the chance to save money, by switching to another lender offering a better deal, and allows you to borrow money, secured against your property, for things like home improvements or to repay other debts.
This also allows you the chance to review the terms of your mortgage. For example, it gives you the opportunity to change the length of your repayment term, increase or decrease monthly payments and even change the type of mortgage that you have.
Things to Consider
First and foremost you should gain an understanding of your current mortgage deal, and then speak to your current lender to see if they can offer you a better deal. You should request a detailed breakdown of the costs when switching to another deal from your current lender, which you can then use as a good starting point when shopping around for deals from other mortgage lenders.
Once you’ve considered the cost, think about the service that you have received from your current mortgage lender. This could play a factor in your decision about which lender to remortgage with.
Back to the Basics
Once you have decided that remortgaging is the right thing for you, and then you need to go back to basics.
You need to follow the same principles you did when you applied for your mortgage:
- Firstly, work out how much you can afford to borrow, especially if you are looking to borrow more. Online mortgage calculators are a good place to start.
- Secondly, consider how long you want the length of your mortgage to be. Can you shorten the length of your existing mortgage or do you need to increase it?
- Thirdly, take a look at what available mortgage types would be best for you. These can range standard variable rates deals, fixed rates, discounted rates, offset mortgages and more.
Remortgaging can take up several weeks, but you will have the peace of mind knowing that you will be on the best mortgage deal for you going forwards.