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Should I Re-Mortgage Or Apply For Product Switch With The Existing Lender?

Many people decide to remortgage or apply for product switches on their homes. You might be wondering just how easy it is to remortgage your home and how it could benefit you. With many lenders, it is possible to remortgage your home once you have had your mortgage for at least six months, although this can vary according to different lenders.

Why re-mortgage your home?

Choosing to remortgage your home can be an important decision for a homeowner. There may be many reasons why you might want to remortgage. For example:

  • To lower your interest rates – it may be possible to find a better deal.
  • To release equity from your home to pay off other debts – high-interest credit cards or loans can often be repaid using this money. However, please think carefully before securing other debts against your home.
  • To benefit from the existing equity in your home – the equity that you release can allow you to make improvements to your house or use the money to improve your quality of life.

There are several straightforward steps involved when you remortgage, but there are also several considerations that you may need to take into account, including your current outstanding balance, your affordability and your eligibility.

Is it easy to remortgage?

Generally, remortgaging your home is easier and more hassle-free than when you take out your initial mortgage. This is primarily because your name is already registered on the deeds to your home. As you may have already spent a substantial amount of time making payments on your mortgage, you will have demonstrated that you are reliable with repayments too.

However, problems can sometimes arise when you decide to remortgage. If you have a very poor credit score, this can pose a challenge. There is a possibility that some lenders will reject your application to remortgage if your low credit rating makes you high risk in their eyes. Therefore, it is essential to ensure that you do everything you can to avoid an adverse credit rating and, if need be, and improve your credit score as much as possible before applying.

Is a complex process involved?

It is often very simple to remortgage, whatever your reasons for deciding to do so. Remortgaging often takes four to six weeks, although it may take longer with some lenders. The first step to remortgaging is to ask your lender for a redemption statement. This will let you know exactly how much the balance is on your mortgage. A redemption statement will also highlight any fees that are associated with your current mortgage.

It is a good idea to contact a reputable broker as they will be able to find the most suitable deal for you. Brokers compare a variety of deals across several lenders so they can find the right deal for you regardless of your personal circumstances.

Once your broker has found the most suitable remortgage for you, it is possible to apply. The lender will make a valuation of your home to ensure that it is congruent with the value of the mortgage. With the help of your solicitor, you can then complete the deal. The new lender will release the money to pay off your old lender, which will end your previous mortgage contract. You may find that there are fees involved with remortgaging, but this can vary from one lender to another.

Are there barriers for self-employed applicants?

Self-employed applicants, freelancers and those on fixed-term contracts might find it difficult to find a new lender. Remortgaging your home may be easier than taking out a mortgage for the first time as you already have a proven history of making your repayments. However, contractors can sometimes experience similar issues when they take out a mortgage or remortgage their home.

Should I apply for a product switch with my existing lender?

This can be a very personal decision for you and your family, but it can help to contact a reliable broker who can talk you through all the applicable steps and help you to make your decision. It is a good idea to check what kind of remortgage or product switch could benefit you. If you are looking for a hassle-free process, then the product switch might be ideal for you. If you are looking at the overall cost implications, you need to have a chat with an experienced mortgage adviser to explore the re-mortgage deals.

When you decide to remortgage your home because you want to benefit from lower rates of interest, it can be a decision that can save you money. If you are paying less interest, this can make your monthly repayments more affordable and allow you to pay less in the longer term too. If you have considered remortgaging your home so that you can consolidate your debts or because you want to release equity to pay for other things, you might find that it is beneficial because you will avoid the high-interest charges on credit cards or loans. However, there is also the chance that you will have to repay more interest overall if the debts are consolidated onto your mortgage, as your interest will be spread over a longer period.

Choosing whether or not to remortgage can also depend on how long you have had your mortgage. For example, if you want to release equity from your home, it will be more beneficial to do so if you have had your mortgage for a long time, as there will be a lower outstanding balance on your repayments and your property may have had chance to appreciate in value.

As a mortgage is secured against your home or property, it may be repossessed if you do not keep up 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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