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Important Factors To Consider When Re-Mortgaging Your Property

Remortgaging is when you move from one lender to another to provide the mortgage for your property. It usually happens when your fixed deal term is coming to an end, and you need to find a cheaper deal in the market. If you are unable to change the mortgage product with the same lender (product switch) or re-mortgage with a new lender in time, you would have to pay the higher monthly mortgage payment which is based on your current lender’s Standard Variable Rate (SVR).

Mortgage advisers have access to the whole of the market mortgage deals to find you a suitable and cost-effective deal. There are so many factors to be considered when selecting a suitable lender such as income-based loan affordability, existing credit commitments, and other lending criteria.

When to start my re-mortgage application?

You should start searching for re-mortgage options with the help of a mortgage adviser, at least three months before your current fixed deal term-end. It gives you enough time to check the lending criteria and other affordability requirements before submitting a mortgage application to a new lender.

It is important to assess the application processing time taken by the lender and the solicitor’s turn-around time. As you are moving your mortgage to a new lender, a solicitor would be involved in the legal process. Most high-street lenders provide free legal services and appoint a solicitor for you.

Sometimes, these solicitors take a significant time to complete the case. It results in the case being delayed and you would have to pay a higher mortgage payment for a certain period. This is because you miss the deal end date to complete your re-mortgage due to delays by a solicitor.

Therefore, it is important to plan for all the potential delays in the process by both the lender and the solicitor. It would be ideal to start the re-mortgage process at least, three months before the current fixed term deal end!

How can a mortgage adviser help your re-mortgage?

On top of finding the suitable remortgage option, a mortgage adviser would take care of all the arrangements required to make sure the timely completion of the case. Further, they would always check the interest rate changes in the market and if there is a lower rate from the same or another lender, they would always inform you.

For example, if you have applied to Halifax for the residential re-mortgage and the mortgage adviser has noticed that NatWest has reduced their interest rates for new applications, the adviser would check suitability and inform you of the new rate. Then, you can consider the remaining time and try a new application with NatWest.

You need specialist mortgager advice to attempt the above as if you don’t get the timing right, it would cause you trouble. Mortgage advisers know the processing time of each lender and the lending criteria inside out!

Do I get credit-checked when applying for a re-mortgage?

The simple answer is yes, the new lender would always run a credit check on your file at the point of full application submission. It is important to time the re-mortgage application properly with a suitable lender. In case, if you apply to a lender and they decline due to a criteria breach, you will run out of time to find a new lender before the fixed deal end date. Also, a new application would require another credit check which might cause a significant drop in your overall credit score.    

There are three main reasons why you might choose to remortgage:

  • To get a better deal
  • To consolidate debts
  • To raise funds

To get a better deal

It can be worth remortgaging to take advantage of better interest rates. Often, when an initial deal period comes to an end, your lender moves your mortgage to their Standard Variable Rate (SVR). This may not be the best deal for you. By speaking to a mortgage adviser, you can secure a better rate, reduce your monthly repayments, and reduce the amount you pay over the life of your mortgage. This is mainly why you need an adviser to guide you.

If you just source online and apply to the lender providing the cheapest rate and get your application declined due to criteria breach, it would affect your chances of securing a good deal with a high-street lender. It will always be an advantage to have a mortgage adviser by your side when looking for re-mortgage options.

To consolidate your debts

You can sometimes use a mortgage to consolidate other debts such as car loans or credit cards and thus reduce your monthly outgoings. You should seek specialist advice if you are consolidating debt. There are Loan to Value (LTV) restrictions when you apply for a remortgage with extra cash for debt consolidation. Your mortgage adviser can help you with this.

To raise funds

You can remortgage to raise money for major improvements such as an extension or a new kitchen. You could also raise money for other purposes, such as your child’s university costs. Further, some lenders would allow you to raise extra cash to purchase BTL properties in the future. Most lenders would ask for new property purchase proof when assessing the additional borrowing.

A mortgage adviser would still help you with lenders who don’t require any document to evidence the reason for raising extra cash. One common factor associated with re-mortgage with extra cash would be the maximum loan to value. Most lenders would not allow you to exceed 85% loan amount of the property value.

How to save money while re-mortgaging?

Remortgaging to get a better deal is often a good decision that will save you money in the short and long term. You can make capital overpayments while re-mortgaging without incurring any early repayment charge! This is just before when you are outside the fixed deal and before starting the new mortgage with the new lender.

Again, timing and planning are very critical with the above methods and a mortgager adviser would have lots of other tricks on different ways to save money while re-mortgaging!

As a mortgage is secured against your home, it could be repossessed if you do not keep up with the mortgage repayments.

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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