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.
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.
Complete your details below and we’ll be in touch to help you with your enquiry
