Many people see their mortgage as their biggest financial overhead. It may however be worth investigating whether you can save money through remortgaging your home to a better deal. At iam mortgages, we have helped thousands of customers find better mortgage deals through remortgaging – you could potentially save thousands of pounds every year by doing so. There are many reasons why you might want to remortgage your home, including:
Your current mortgage deal is coming to an end
Many good rates on mortgages offered by lenders come to an end after a maximum of five years. Following this, most lenders usually put their customers on their standard variable rate, which is likely to be higher than the introductory rate they first offered. If this applies to you, you should begin to look for a better deal around four months before your mortgage deal ends.
You’d like to receive a better rate
The deal you are currently signed up for may have an early repayment fee, which can be up to 5% of your outstanding balance. You might also have to pay an ‘exit fee’ when you repay your mortgage. Remortgaging and doing some calculations on whether you can save money by remortgaging to a different deal could save you more money than if you were to stay on your current plan and pay such fees. Some mortgage plans even offer ‘payment holidays’ – there will be charges for these, though, so do your research.
Your property’s value has increased
If since you took out your mortgage your home’s value has greatly increased, you could be in a lower loan-to-value band, meaning you could satisfy a lender that could offer lower rates.
You want to make overpayments, but your current mortgage deal won’t allow it
If you’ve had a windfall or an inheritance and want to put more money into your property, you might find that remortgaging will help you find a better deal that can reduce your loan size.
You’d like to borrow more money
If your current mortgage lender will not offer you more money to pay off debts or for home improvements, or the terms of the deal are not very good, remortgaging might enable you to raise more capital on a lower rate.
If you need expert advice on remortgaging your home, speak to our team of experts at iam mortgages. We can help you find the best mortgage rate for your financial circumstances when you want to switch, so you have peace of mind that you are getting the right deal at the right time.
How do I remortgage my home?
When you remortgage your home, you are switching from one mortgage deal/lender to another. Such a switch can be for the same amount you already owe on your current mortgage, or a higher or lower sum. In some instances, remortgaging can cost you more money, so it is important to do your research and find a competitive deal with the benefits you want. Check for any charges that are applicable to your current mortgage deal before switching. When you have found a deal that works best for you, you’ll need to provide your new lender with details of your financial circumstances such as proof of salary and your current outgoings. Providing your lender is sure that you can afford the repayments, they will offer you a remortgage deal. Note that remortgaging will still incur processing costs and conveyancing fees, and may take a little time to process. For more information on fees associated with remortgaging your home, talk to us at iam mortgages today by using our simple online enquiry form.
What are the costs of remortgaging my home?
The costs to you when it comes to remortgaging will entirely depend on the new type of mortgage deal you choose. Typical fees associated with the remortgaging process include:
- Valuation fee
- Processing fees
- Conveyancing fees
When should I remortgage?
Ideally you shouldn’t wait until your current mortgage plan expires. Start to look into remortgaging around 4 months before your current deal expires. If you do leave things longer, you risk being placed on your mortgage lender’s standard variable rate. This is likely to be much higher than switching to a different deal. As interest rates are currently very low, mortgage rates are similarly at their lowest. Remortgaging could potentially save you hundreds (if not thousands) of pounds if you find the right deal for your financial circumstances. We can help with this at iam mortgages.
What type of deal should I switch to when remortgaging?
There are several types of mortgage deal available, so it is important to research them carefully when remortgaging to ensure that switching can save you money.
Fixed rate mortgage
This means you only pay a certain amount through your monthly repayments for a fixed period of time. This is great for ensuring that your payments will not change. However, staying with a fixed rate mortgage means you pay the same rate even if you are able to pay back more and your financial circumstances change.
A tracker mortgage tracks the base rate of the Bank of England and sets a percentage either above or below it. If the base rate either rises or drops, the rate you pay on your mortgage will follow suit. You need to be sure you can keep up with repayments when the base rate rises, should you opt for this type of mortgage.
This type of mortgage offsets your savings against your outstanding mortgage balance.
This type of mortgage offers a limited period of time in which the lender’s standard variable rate is discounted.
Capped rate mortgage
This type of mortgage caps the rate you pay back, meaning it cannot go past a certain threshold. This type of mortgage gives flexibility, while it’s cap means that repayments stay affordable.
If you are confused or struggling to determine which type of mortgage is right for you, we can offer help and support through our comparison service. You’ll need to consider whether you want to remortgage on a repayment or interest-only basis. The latter may have strict criteria depending on your circumstances. It is always worth considering reasons why remortgaging might not be right for you at the present time, too. You should avoid remortgaging your home if the following apply:
- You’ll end up paying high repayment charges as a result
- You’ve almost completely paid off your outstanding mortgage balance
- Your credit rating is poor
- The value of your property has fallen
If you have questions about remortgaging your home, submit an enquiry to iam mortgages using our simple online form. Our team of mortgage experts will be happy to assist you.