Remortgaging is switching your existing mortgage to a new deal, either with your existing lender or a different provider. You're not moving house, or selling and the new mortgage is still secured against the same property. Sometimes property owners choose to do this to release some money.
When you are under money pressures and looking for ways to raise some, remortgaging is a viable option to take. In basic terms, it is the process of getting a new mortgage for your property. There might be multiple other reasons that you would want to remortgage your property, but the process is more or less the same and gives you a good opportunity to save money.
Here are some of the top FAQs that Brokers hear most often about remortgaging...
How Does Remortgaging Help First Time Home Buyers
As you make monthly mortgage payments, you build up your share of equity value in the property mortgaged. Pretty much the more you repay, the more equity you will have. The property value will also increase significantly over the years, and you stand a chance of getting additional funds released if you choose to remortgage.
Remortgaging also helps you switch to a better deal that aligns with the present market conditions and interest rates. Here are some of the benefits of remortgaging summarized.
- Remortgaging can help you switch to a deal with a new fixed-rate tracker rate, helping you save money.
- You can switch to better loan terms. For instance, if you are under an interest-only mortgage, you can switch to a repayment mortgage, which is more beneficial for you.
- Mortgage interest rates are related to the Bank of England base rate. You can switch to new mortgage deals if the Bank of England reduces the base rates
Mortgage and Remortgage Comparison
In essence, both a remortgage and mortgage are the same thing. It is a loan obtained on a property with long term repayment schedules. The difference would be in the terms and options provided by the lenders to mortgage and remortgage borrowers.
Some options could be made exclusive for a mortgage and vice versa. You will have to make a comparison of all the available remortgage products and choose the one that best fits your needs and financial situation.
When To Consider Remortgaging?
Here are some instances when you can consider remortgaging:
- When you are nearing the end of your mortgage deal
- Your value of equity on the property has increased considerably
- You prefer a better mortgage deal
- You want to borrow more money
- You want to beat the rate hike
Make a note of when your initial fixed-rate or tracker rate comes to an end and give yourself some time to assess the market conditions. If in six months, you can find better mortgage deals that will have lower rates, you should consider remortgaging. Otherwise, you may have to pay more as the lender will move on to the standard variable rate.
Who Values The Property In A Remortgage Deal?
The lender takes care of the property valuation through a drive-in survey or existing sales data. Even though the lender has the final say in the property value, you should do your own research and estimate the property value to work out the mortgage deal and loan amount you will be eligible for.
Can You Remortgage With The Same Lender?
Yes. If you choose to remortgage with your existing lender, the process is usually called a product transfer as you are switching from one mortgage deal to another with the same lender. This can speed up the remortgaging process but provides you with limited product options.
Nevertheless, the loan application process will remain the same for new or your existing lender as you will have to show proof of income and qualify for the remortgage product.
How Much Does Remortgaging Cost?
Remortgaging can cost you in terms of:
- Exit fees
- Arrangement fees
- Legal fees
Do You Need Solicitors To Help With Remortgaging?
The remortgaging process requires legal paperwork and verification. For this purpose, hiring a solicitor is highly recommended. If you don't hire one, the lender may provide a conveyancer's to take care of the legal work involved, and the costs might be added to your arrangement and legal fees.
Have you got more questions? Drop us a comment and we'll ask our experts for you!