14 Common Remortgage Questions Answered for Homeowners
Remortgaging can seem daunting, but it doesn’t have to be! Here are 14 of the most frequently asked questions to help you get started:
1. What is remortgaging?
Remortgaging is simply the process of switching your existing mortgage to a new one, either with your current lender or a different one. It’s like refinancing your car loan, but for your house!
2. Why do people remortgage?
People remortgage for various reasons, including:
- To get a better interest rate: This can save you a significant amount of money over the life of your loan.
- To borrow more money: You might want to fund home improvements, consolidate debt, or make a large purchase.
- To change the terms of their mortgage: You might want to switch from a variable rate to a fixed rate, or vice versa.
- To release equity: If your home has increased in value, you may be able to borrow against that equity.
3. When should I consider remortgaging?
There’s no one-size-fits-all answer, but some common times to consider remortgaging include:
When your current fixed-rate deal is ending: You’ll likely be moved to your lender’s standard variable rate (SVR), which is often higher.
When interest rates have fallen: You may be able to secure a lower rate than your current one.
When your financial situation has improved: A higher income or better credit score could qualify you for better deals.
When you need to borrow more money: Remortgaging can be a way to access additional funds.
4. How much can I borrow?
This depends on several factors, including:
- Your income and expenses: Lenders will assess your affordability.
- Your credit score: A good credit score will increase your borrowing power.
- The value of your home: Lenders will typically lend a percentage of this value (loan-to-value or LTV).
- Your existing mortgage balance: This will be taken into account when calculating how much you can borrow.
5. How do I find the best remortgage deal?
Use a mortgage broker: They can access deals from a wide range of lenders and help you find the best one for your needs.
6. What are the costs involved in remortgaging?
Valuation fees: Lenders will need to value your property.
Legal fees: You’ll need a solicitor to handle the legal aspects of the remortgage.
Arrangement fees: Some lenders charge a fee for setting up your new mortgage.
Early repayment charges: If you’re remortgaging before the end of your current deal, you may have to pay these.
7. How long does it take to remortgage?
The process can take anywhere from a few weeks to a few months, depending on the complexity of your situation and the lender’s processing times.
8. Do I need a solicitor?
Yes, you’ll need a solicitor to handle the legal aspects of the remortgage, such as transferring ownership and dealing with the Land Registry.
9. Will remortgaging affect my credit score?
Applying for a remortgage will leave a mark on your credit report, but it shouldn’t have a significant impact on your score. Making your mortgage payments on time will help to improve your credit score over time.
10. Can I remortgage if I’m self-employed?
Yes, but you’ll need to provide more documentation to prove your income, such as tax returns and bank statements.
11. Can I remortgage if I have bad credit?
It may be more difficult, but not impossible. Some lenders specialise in mortgages for people with bad credit.
12. What is a product transfer?
This is when you switch to a new mortgage deal with your existing lender. It’s often quicker and easier than switching lenders.
A product transfer is essentially switching to a new mortgage deal with your existing lender. It’s different from remortgaging, where you move your mortgage to a completely new lender.
Think of it like this:
Remortgaging: You’re changing banks for your mortgage.
Product Transfer: You’re staying with the same bank, but switching to a different mortgage product they offer.
Here’s why people might consider a product transfer:
- Convenience: It’s often quicker and easier than a full remortgage, as your lender already has your information.
- Less Hassle: You might not need a new valuation or legal work, simplifying the process.
- Potentially Lower Fees: Some lenders offer preferential rates or reduced fees for product transfers.
13. What is a remortgage offer?
This is a formal offer from a lender, outlining the terms of your new mortgage. It’s important to read it carefully before accepting.
14. What happens if my circumstances change after I’ve applied for a remortgage?
You should inform your lender immediately. Changes in your income, employment, or credit score could affect your eligibility for the mortgage.
Remember
It’s always a good idea to seek professional advice from a mortgage broker or financial advisor before making any decisions about remortgaging. They can help you understand your options and find the best deal for your circumstances.
