FAQs - Should I re-mortgage?
Of course, you may be perfectly happy with your current mortgage. But there are a number of reasons why you might want to consider shopping around for a better deal - and not just to save money.
If you're ready to think about remortgaging, our expert and independent financial advisers can guide you through the hundreds of mortgages available, helping you find the one best suited to your needs with an absolute minimum of stress and hassle.
Let's look briefly at the most frequently asked questions regarding remortgaging:
Can I get a better deal?
It does depend upon your current mortgage, there's always a chance switching to a different mortgage guided by an expert advisor could save you money - reducing not just your monthly payments, but also potentially the overall amount you need to pay back.
This is of course very dependent on current interest rates, as we update this blog in September 2022 rates are rising, therefore, there may not be a saving. However; depending on the length of the term of your current agreement and future plans, there may still be an opportunity to save now or against rising interest rates, as you will read below.
Your current lenders' mortgage choices might be what you need, however; we would absolutely advise you to speak to an independent mortgage advisor like ours. Choose one that is totally independent, as this means the whole of the market can be searched to find the mortgage offering the best deal for you.
Should I fix my outgoings and protect against rate rises?
Interest rates may rise or fall - and if you're worried that rising rates could cause you problems in the short to medium term, the answer must be yes, consider a switch to a fixed-rate deal. You'll know exactly how much you'll have to pay for an agreed period - usually, two, three or five years. This means you'll enjoy the peace of mind that comes with being able to plan your monthly budgets with real certainty.
When should I re-mortgage?
You can start looking at options once you are within 6 months of your current mortgage expiry date. If you select a new lender their mortgage offer will last for 6 months meaning you can secure a rate early, essentially buying money at a cheaper price.
When rates are on the rise you can make an application early and have the security of knowing you won't be faced with further increases. There is an added benefit of flexibility, if the mortgage interest rates do go down, you can resubmit your application for a more favourable mortgage agreement.
Here's an example from one of our advisors - Mr Smith's re-mortgage date is 1st October, he applied for a new mortgage with a different lender in May. This ensured the application was processed, all the paperwork was completed and he secured a rate of 2.27%. However; if he waited until September the borrowing rate would be 3.65%.
At the September rate of 3.65%, monthly payments would be £1,010. But at the rate secured of 2.27% payments were £855. The total saving is £155 per month which on a 5-year fixed rate comes to a total saving of £9,300.
Please note that 'mortgage transfers' with the same lender have different stipulations depending on the lender. Some may allow you to fix at the current rate as early as 4 months, others less, or possibly even more. Please confirm with your lender or Financial Advisor.
What about releasing equity?
If you have built up equity in your home over the years, remortgaging can certainly provide funds to make home improvements, cover the cost of other major projects, or pay off other more expensive debts. Our advisors often help homeowners with this decision, while the freed funds can be very beneficial it's important the correct new mortgage is established to ensure ongoing best value and savings for years to come.
What else do I need to consider?
There could be costs, reading of the small print will be required, or of course, a good financial advisor will alert you to all of the potentials. They can include booking or completion fees charged by a new lender, conveyancing costs, property valuation costs, early repayment charges (ERC) or exit fees charged by your current lender. Be sure to get these confirmed before making your final decision.
We hope this has helped and of course, if you would like more information from said 'independent financial advisors' then we will be happy to help. For free, expert, independent advice click here
Fri 30 Sep 2022