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Remortgaging

Given that there are many people looking to buy property, with different requirements, it is understandable that there are many different mortgage types to choose from. Each mortgage has been tailored for certain needs and requirements.

There are many things to consider if you are looking for a mortgage and if you need any guidance or advice, we are more than happy to help.

We can take you through the full range of mortgage products and help you find the mortgage that is likely to suit you best.

Why should you re-mortgage?

To ensure that you have the best deal and that you are taking advantage of the best rates on offer, it is important that you review mortgages at least every couple of years. If you blindly stick to your existing mortgage, you miss out on money and cause yourself to pay more.

A re-mortgage occurs when you switch your current mortgage to a new deal, either with your current lender or a different lender. There are many reasons people wish to re-mortgage, including:

• Saving money
• Raising funds
• Not having to move home
• To consolidate debt
• To find the best deal for their needs

There are various mortgage types available when you re-mortgage, and it is vital that you consider all your options. The main mortgage options are reviewed below:

Discount rate

As the name suggests, this style of mortgage offers a discount on the standard variable rate provided by a lender. When the SVR changes, the rate that is paid will often change in line with the SVR fluctuation but in relation to the discount.

You usually find that larger discounts are offered for shorter periods and when the discount rate period ends, you will be transferred back to the lenders SVR.

This is a great option to make savings on the SVR but be aware that there are often significant early repayment charges associated with this mortgage, so if you wish to re-mortgage or move to another lender, it can be costly.

Fixed rate

With a fixed rate loan, the interest rate is set for a defined period. This option provides you with confidence in knowing how much you will pay each month in interest. However, if the base rate falls, you may lose out by paying a more expensive level of interest.

Capped rate

With a capped rate, you can be confident that the interest rate level will not increase beyond a set level for a defend period. If you are looking for confidence in knowing your monthly payments won’t go above a certain level, this is a smart option. However, the rates are generally higher than the fixed rate option.

Tracker rate

This option offers you confidence in knowing the rate you pay moved in line with the base rates.  Of course, if the base rate increases, the amount you pay will increase, so be aware of this aspect.

Cashback mortgages

A cashback mortgage usually offers a lump sum when the mortgage has been arranged and taken out. This can help buyers to furnish their home or pay off any other form of debt such as a credit card debt.

It is helpful to get cash when you need it but this benefit is usually offered with the standard variable rate and there is not much flexibility with the mortgage.

Droplock mortgages

This style of mortgage allows you to start off with a tracker or discount mortgage but then change to a fixed rate mortgage without any early payment charges. If interest rates look set to rise, this style of mortgage allows you to initially benefit from appealing rates and then protect yourself from expected rises.

Offset mortgages

An offset mortgage enables you to offset your mortgage balance with any funds in savings or a current account. You pay interest on the net balance of the accounts.

What are the steps involved with re-mortgaging?

As your property deeds are already registered under your name and details, re-mortgaging is a much simpler process than taking out a new mortgage. The simplest process comes when you re-mortgage with our existing lender but re-mortgaging with a new lender isn’t that much more difficult. We are on hand to provide support and we are more than happy to take you through the process from beginning to end.
The lender will require a valuation of your property to ensure they are happy there is sufficient value in the property for them to lend to you.

You will need to apply for a re-mortgage in the manner you would apply for a mortgage, and this is underwritten by the lender, who need to see evidence that the loan has been maintained so far. The lender will then provide you with an offer. Conveyancing work must then be carried out, ad local searches will be undertaken.

The solicitor involved with the process will make sure the previous lender is paid when the new mortgage funds are provided and if there are additional funds being borrowed, these will be released upon competition.

What are the costs of re-mortgaging?

You should find that re-mortgaging incurs fewer costs than when the costs associated with buying a property. This is because many of the charges and tasks associated with buying a property are not present or relevant.

Tasks not involved with re-mortgaging include stamp duty, prominent legal fees and homebuyer’s survey. Fees which can arise during the re-mortgaging process include:

• Early repayment fees
• Valuation fees
• Arrangement fees from the lender
• Broker and booking fees
• Legal fees
• A discharge fee from the previous lender

If you would like guidance on re-mortgaging, please get in touch as we are always happy to help.

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