A mortgage is a long-term responsibility and commitment, and typically you won’t be free of the monthly repayments for 20 – 30 years. However, that doesn’t mean you should dismiss this area of your personal finances in the short-term term, you may not be able to get rid of your debt, but with that being said you can make sure you’re always getting the best possible deal on it. Make sure you research the average rates and look into when you can remortgage your property.
Depending on your personal circumstances, remortgaging could save you a lot of money. You won’t always be able to find a cheaper deal, but if you don’t at contemplate remortgaging your property on a regular basis, then there is a chance that you are missing out on the possibility of reducing your monthly repayments or the total cost of your mortgage.
What is Remortgaging Your Property?
Remortgaging is a simple way of freeing up some extra cash for your property. To put it simply, remortgaging is about either taking out a new mortgage against your home, to replace your old one or to borrow more money against your property. Or, get out of a current deal that isn’t benefitting you or your financial situation anymore.
The incentive period on your fixed rate deal may have just finished, meaning that you have been moved to a standard variable rate mortgage. As these types of mortgages fluctuate with the Bank of England’s base rate, they can actually end up costing you extra money than you planned on repaying to start with (if the interest rates have increased). However, there isn’t any way to predict when the interest rate increases are going to take place, and how much they will go up by.
So, if you want to free up some extra money for your home, remortgaging might be the road you want to go down.
Why and When Should I Remortgage My Property?
Why and when you should remortgage your property can depend on a variety of different factors. Even so, you should generally begin looking for a remortgage deal around six months before your current one ends. This will give you enough time to finish the application process to make sure your new deal begins just as your last deal ends.
If your current deal is a fixed rate mortgage, you will want to make sure that your lender’s standard variable rate won’t leave your finances with concussion. If the Bank of England’s interest rate has dropped since you took out your fixed rate, then you may not want to remortgage your property.
However, if the interest rate has increased during the fixed rate period, then you will most likely want to get another fixed rate deal on a remortgage, which might keep you on a low rate that is similar to the previous one. If you are on a discounted variable rate and the rates have risen dramatically, you probably won’t feel the shock as your rate will have increased over that time too. Although, you will most likely want to move to a fixed rate deal. Remortgaging is essentially is an opportunity to keep paying your mortgage at the introductory rate on a new mortgage deal.
The Steps to Take When Remortgaging Your Property
Find the best remortgage deal that suits your circumstances. You can either do your own research or use an independent mortgage broker to investigate your remortgage options.
Getting your property valued. As part of the approval process, the new mortgage lender will request a valuation report for your property. At the same time, the designated solicitor will ask for the title deeds and carry out the required searches.
Contact your current mortgage lender for a redemption statement. This lets you know how much is outstanding on your current mortgage and will include all fees and costs associated with repaying it.
Complete the mortgage application. You can get ahead at this stage in the remortgaging process by ensuring you have the required information and documentation ready. As with any mortgage application, the approval process will be subject to a credit score and affordability checks.
Remortgage completion. Once the remortgage is fully approved then a completion date will be arranged. This will be the date that your new mortgage starts and your previous mortgage is repaid and closed off.