For most people, your mortgage is your largest financial commitment,therefore remortgaging can be your biggest money saver.
With the uncertainty of interest rates, trying to save yourself money on your remortgage is a good idea, but there are many other advantages of remortgaging and on the other hand, it may not be the right option for everyone.
Our guide will help you decide if remortgaging could benefit you, as well as providing you with vital information you need to know before committing, and some questions to ask your adviser.Should I Remortgage?
Remortgaging is shifting your current mortgage to another lender to obtain a new deal. Saving money in interest is the most obvious reason for remortgaging; it is your biggest financial commitment so it makes sense that you get the best deal possible to suit your needs. Staying on your lenders standard variable rate after your introductory deal has ended can be right for some, but do make sure that this is an active choice not a blind one as the majority of lenders standard variable rates are much higher than their other mortgage products, which means you could be paying large amounts in unnecessary interest .
It’s not always entirely about saving money though, ensuring that you have a product that is right for your circumstances is imperative.
Maybe you’ve had a pay rise or a change of job and would like to pay more of your mortgage off to reduce the term?
Maybe you need to bring your mortgage payments down because you require lower payments due to a change in circumstances?
Maybe you are concerned about interest rate changes and require your mortgage payments to be stabilised for a long period?
Maybe you want to borrow more money? Home improvements, debt consolidation and raising cash for your children to buy a property are all valid reasons for borrowing more on your mortgage.When should I NOT consider a remortgage?
You may already be on a great deal or tied into a fixed rate, which could potentially incur heavy fees (early repayment charges also known as ERC’s). In situations like these, if you left your current lender it could prove more expensive!
Alternatively, most lenders offer product switch options, which means the lender is willing to offer you a new deal to stay with them. A good mortgage adviser can assist with this and advise whether it’s best for you to stay with your existing lender or remortgage to a new one.
Product switching (if available) is also a good option if your circumstances have changed since you entered into your last deal. Maybe you don’t fit lenders’ criteria anymore or your credit file has become damaged. These are all factors that may rule out remortgaging or make it more challenging.
Some things you might want to check prior to applying for a new mortgage are:
- Early repayment fees on your current deal
- Deeds release fees (these can be anywhere between £50-£200 depending on the lender)
- The current loan amount, so you know how much you need to remortgage for (you can call your lender for an up to date figure)
The current LTV (loan to value) of your property. To calculate this, divide your loan amount by the property value.Improving your credit rating
- Ensure you are on the electoral roll
- Check your credit file for any discrepancies
- Check the address on your credit file is current
- Break with past relationships – write to lenders to disassociate yourself with ex partners etc.
- Do not miss or make late payments
- Keep applications to a minimum before applying to remortgage
- Avoid withdrawing cash on a credit card
- Avoid payday loans at all costs
- Pay off your credit cards in full each month
- Close down any unused credit cards
Affordability
Proving affordability to your proposed lender can be a difficult task these days. A mortgage adviser can help to give your lender a clear picture of your financial circumstances. They have access to specific information as well as knowledge of lenders’ criteria and what documentation and information they require. A good adviser can increase your chances of acceptance by matching you to the best deal available based on your circumstances, credit history and their knowledge of the industry.What is a broker and how can I benefit from using one?
Good Mortgage advisers will be qualified and experienced. There is so much information out there to process and using someone highly skilled in this area can be hugely beneficial and take the strain out of searching through endless options on the internet and being baffled by the jargon and the sheer number of banks and building societies offering mortgages. Some brokers charge little or no fee’s (depending on the services offered and your individual circumstances) and choose to get paid by the lender for bringing in the business, saving you even more money.
A good adviser should be able to quickly source a relevant product that fits your needs and budget and they can talk to lenders on your behalf presenting your application in the best possible light and increasing your chances of acceptance. In addition, some lenders will only work with brokers offering intermediary exclusive products, which you would not otherwise have access to if you were to go direct.
Whole of market advisers offer exactly what they say on tin, they can research the market quickly and thoroughly saving you from trawling through every lender one by one. They have access to the whole of the market (as opposed to one bank or a select few) and the resources to speak to lenders underwriters quickly, aiding the speed of applications and allowing them to resolve problems quickly as opposed to waiting days for a call back or an in-branch appointment with a bank.
Regulated by the FCA (Financial conduct authority), they are unbiased and good adviser will usually come by recommendation giving you further peace of mind.What paperwork will I need to apply?
All lenders will need the following as a minimum:
- Proof of income – Often your last 1-3 months payslips or 2-3 years accounts/SA302’s if you’re self -employed, including proof of bonuses or commission and pay rises
- Latest 1-3 months bank statements
- Proof of address – Usually in the form of a utility or council tax bill dated within the last 3 months
- A valid proof of identity such as a passport or diving licence
What type of mortgage do I need?
With so many options out there,it’s best to liaise with a mortgage adviser who can help you chose which type of mortgage fits your needs. They can give you impartial advice based on an initial assessment of your financial circumstances and what offers are available.
Everystep financial are fully qualified, whole of market mortgage brokers, with a wealth of knowledge and experience in all types of remortgaging. We are available to visit you at a time convenient to you, in the comfort of your own home. We have offices in Weston-super-Mare and Hanham in Bristol and telephone appointments are also available if you prefer.
Call us to book a free no obligation initial review and let us take the stress out of remortgaging!