Looking to Remortgage?

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What is a remortgage?

There is a lot of conversation about remortgaging, but what does it actually entail and who can do it? We have asked our resident remortgage expert, Gavin Torpey, to break it down:

 

What does "remortgage" actually mean?

A remortgage is when you take out a mortgage from a new lender to repay your existing lender and the balance.

 

Why do people remortgage?

The reason remortgages are popular is you can normally get a lower interest rate and better all-round deal, by going to a new lender rather than staying with your existing provider (depending on your circumstances).

 

When should I remortgage?

You can remortgage at any time, however it may not always be the right time. You may want to consider:

  • When your current fixed rate mortgage deal ends
  • When you can save money by remortgaging, even after paying arrangement and exit fees.
  • When you own enough equity in your current property.

 

When shouldn’t I remortgage?

When weighing up whether to remortgage, you need to consider money, timing and your personal circumstances, as well as the following scenarios:

  • If you have a very high early repayment charge and it would be cheaper to wait until the end of the incentive period
  • If you have a very low level of equity in your current property, you may find it difficult to get an improved mortgage deal

How do I remortgage?

You can remortgage with a bank, building society or specialist mortgage lender, and a mortgage adviser with access to several products and lenders will be able to advise you on what’s most suited to your current circumstances.

Are there costs involved in remortgaging?

The costs involved in remortgaging will depend upon your individual circumstances. Possible costs to look out for are:

  • Early repayment charge to your existing lender
  • An exit fee to your existing lender
  • Possible mortgage fees to your new lender
  • Possible fees including valuations, conveyancing and mortgage
  • Potential mortgage adviser fee

Do I have to wait until my current product ends and I’m on my current lender’s SVR before I can move to another product?

Some lenders will allow you to apply for your next product up to six months in advance, meaning that you can move seamlessly between one product and another. This means you may be able to avoid going onto your lender’s SVR, which could be a higher interest rate than either your existing or new product, so this could save you money.

This does vary from lender to lender though, so if you want to ‘book your rate in advance’ then make sure you tell them as soon as you can so that they can look at the options available to you.

 

If you are still unsure, or are looking to remortgage please don't hesitate to contact any member of our team on 03454 500200, or click here for more info.

With mortgage brokers in Winchester, Southampton, Farnham, Bishops Waltham, Alton, Chandlers Ford, Alresford, Romsey and Park Gate, you are never too far from mortgage advice.

 

You may have to pay an early repayment charge to your existing lender if you remortgage. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

The property market has experienced a resurgence of low-deposit mortgages with increasing numbers of lenders offering 90% loan-to-value (LTV) products. The low-deposit comeback is likely to initiate a further rise in the demand for property from first-time buyers and those who are still holding their breath for a much-wanted stamp duty holiday extension.

Research by Moneyfacts, the financial information service, has revealed a staggering increase in the number of mortgage deals in recent weeks – from 160 deals available on 1 January to 277 on 12 February. But, more significantly, the availability of 90% LTV products leapt from 32 to 47 in the same period and, with cashback deals for first-time buyers with a 10% deposit increasing to 83 from 50 just a month ago, there’s fresh hope for those wanting to get onto the property ladder.

‘We’ve seen a surge in the availability of low-deposit mortgages since the start of the New Year,’ revealed Alain Amos, Managing Director of Charters Financial Services. ‘Before Christmas, the restrictive conditions of the few high LTV providers around had made it difficult, if not impossible, for many prospective borrowers to take advantage of products that were on offer for limited periods.

‘Fast forward just a few weeks and, with the earlier stipulations being removed from what are now core range products for the majority of high street lenders, low-deposit mortgages have made a welcome comeback. There is now a real opportunity, in particular for many first-time buyers, to join the mortgage market having been locked out of it for much of 2020.’

Indeed, Eleanor Williams, finance expert at Moneyfacts.co.uk, has pointed to the potential for a concrete strengthening of the first-time buyer market:

‘There are of course still hurdles for these borrowers to overcome,’ she explained. ‘House prices inflated quite significantly last year – although early indications are this may be slowing in 2021 – and savings rates have continued to descend to rock bottom lows, making building a larger deposit difficult, as have high rental payments. But their options have been steadily increasing and, added to the news that the homebuyers using the current Help to Buy equity loan scheme have a further extension on the deadline for completions, there is hope that 2021 may see more potential homebuyers take that first step onto the property ladder.’

If a low-deposit mortgage sounds appealing, the renewed scope for a great deal makes this is the perfect time to speak to a mortgage broker who can give you all the advice and support you need in choosing the best deal. Contact our team of specialist mortgage experts and we’ll talk you through your options.

Need more space? Why not think about remortgaging?

If you’re after home improvements, a special purchase, or access to a lump sum for a home payment, we can help find the right mortgage that will keep your payments low over a term that suits you best.⠀

Find out more on remortgages: http://bit.ly/CFSremortgages

In March, amidst the worry and concern surrounding COVID-19 which had gripped the world as well as the nation, and as a measure to help soften any further blow the crisis may have, the Bank of England cut the bank rate to an all-time low of 0.1%.

This has been positive news for anyone looking to save money by remortgaging.

Due to the situation we find ourselves in, some have been made redundant, had to sacrifice a number of working hours per week or been furloughed under the government scheme. It is these types of changes which may meaning revaluating our financial circumstances.

And with mortgage payments the most likely largest outgoing each month, the opportunity to reduce this and taking advantage of the new all-time low interest rate is too good to miss out on!

It is very much business as usual where remortgaging is concerned so there are options open to you. We know, through experience, that some will wait until their current fixed rate deal is expiring before moving forward. You can switch many months before without incurring any early repayment charge. If you don’t take action, your lender will automatically switch you onto their Standard Variable Rate – this is usually a higher rate and an unnecessary expense you could easily avoid.

Speaking to an expert Mortgage and Protection Adviser means you can rest assured they will find the right deal for you. They will also be able to advise as to where you have any early repayment charges against your current mortgage – the answer to this will impact on how you move forward.

We have access to 1,000’s of mortgages with over 90 lenders and 12,000 products. Call us on 08454 500200 for tailored advice about how we can help you.

 

 

Why should I remortgage?

Very rarely do you take out a mortgage and stick with the same one for the whole term – i.e. 30 years – until it’s all paid off and you’re mortgage-free (oh, the dream!). Instead, it’s much more likely you'll find yourself looking to remortgage to take advantage of a new deal to suit your needs and current budget.

Each household is different and there are various reasons why you might look to remortgage. Perhaps you want to borrow more money, or maybe you’ve seen a better rate that you’d like to switch to.

The interest rate has dropped from 0.25% to 0.1% so there could be an opportunity for you to save money by remortgaging. Just be aware that sometimes, the lender will ask you to pay an early repayment charge before you can switch. It’s important to weigh up the price of the early repayment charge (sometimes referred to as exit fee or admin fee) against the costs you’ll be saving with the lower interest rate.

Your current fixed deal is up for renewal

If you took out a fixed rate mortgage where you pay the same amount every month and the interest rate remains the same, once the initial term has ended (it would have been 2,3,5 years), you’ll fall onto a standard variable rate (SVR) where you could end up paying a higher interest rate than you were previously. This is usually the time when you might look to remortgage in order to switch to a better mortgage deal.

You want to move from interest-only to repayment

Perhaps you’re on an interest only mortgage and you want to move to a repayment mortgage. Generally speaking, your lender should be able to change this for you without the need to remortgage but if they can’t offer you the deal you want, then you might consider a full remortgage.

You want to make overpayments

You might have a higher paying job now than you did when you took out your mortgage, meaning you now have more disposable income and can afford to make overpayments, but perhaps your current lender doesn’t allow you to. Therefore, you might want to look at changing over to a new mortgage with a lender who will allow you to make overpayments.

Borrowing more money

Moving home can cause a lot of upheaval and can be very expensive by the time you’ve paid for all the fees and moving costs. Choosing to stay put and make home improvements can be a cost-effective way of getting the house you’d like.

In order to cover the cost of the improvements, whether for an extension, loft conversion etc., you might consider remortgaging. Don’t forget to do your research first though and weigh up the pros and cons of paying the early repayment charge, as you might find that a home loan is overall better for you than remortgaging.

Just be aware that your lender will want to know what you intend to use the money for and may ask to see builder’s quotes etc. as evidence.

Do I pay more money when I remortgage?

This depends on the lender, and why you are choosing to remortgage. Sometimes the lender will require you pay an early repayment charge before you switch, which does add to the overall cost of remortgaging. However, this may be offset over time by the lower interest rate you find with a different lender.

For the most part, homeowners tend to remortgage to take advantage of their improved rate as they near the end of a fixed term mortgage deal. This better loan-to-value allows you to make reduced payments over the new mortgage term, and can have a positive impact on your monthly budget.

Do I need to remortgage?

No. Although remortgaging can be useful to help free up money, reduce your monthly bills or help you borrow more money, not everyone needs to remortgage.

If you’d like to find out more about remortgaging your home, talk to our team of expert mortgage advisers and we’ll go through your options with you and find a product and a rate that’s the right fit for you. Call us on 08454 500200 or click here to make an enquiry.

 

Why a remortgage may be your best option.

Chawley Soper, one of our Mortgage & Protection Advisers, breaks down for us how the perception of what remortgage means and how it could save you money on your mortgage repayments:

 

'Remortgaging' has been a term associated with raising money against your property to consolidate debts or extend your home however this has changed. In the consumer-led, comparison driven world that we all now live in, many of the remortgages taking place in the UK are now customers switching provider to secure a better deal that saves them money.

It’s thought that as many as 40% of UK Homeowners with a mortgage are currently paying more interest than they might have to because their mortgage loan has moved onto their providers standard variable interest rate. Mortgage lenders now have mortgage deals designed for people who are on, or are about to fall onto their current lenders standard variable rate and wish to secure a better deal.

Many of the usual inconveniences of switching your mortgage provider have now become avoidable. With working out which lender is offering you the best deal, being dealt with by a qualified mortgage adviser and many of the costs you would usually find with switching mortgage provider including the cost of the legal & property survey processes often being paid for by the new provider.

With the Bank of England bringing the base rate down to a historic low of 0.1% in recent weeks many UK mortgage providers have brought out new fixed rate products that pass this saving on to new mortgage customers.

There has likely never been a better time to sit down with an adviser and discuss switching provider. Call us on 08454 500200 or email hello@chartersfinancialservices.co.uk to find out more.

 

The advantages and disadvantages of remortgaging

Remortgaging your home can make good financial sense if you’re a homeowner and want to take advantage of a better dea. However, there are a number of advantages and disadvantages that you should be aware of before you start a remortgage application.

Here are the key advantages and disadvantages of remortgaging:

The advantages:

  • You can borrow at a lower interest rate than your current mortgage deal, saving you money on your monthly repayment.
  • You can use some of the equity in your home to release funds - great for doing that renovation you've always dreamed of, or using the cash for something else.
  • You can consolidate your debts into one affordable payment and reduce your monthly outgoings.
  • You can move to a new mortgage product that suits your changing financial circumstances - if your circumstances change, you should update your mortgage deal to reflect them.

 The disadvantages:

  • You may need to pay a fee when you remortgage – and that could make your new lower mortgage rate less rewarding.
  • You’ll be using your home as security for your remortgage, which means it could be repossessed if you don’t keep up with your mortgage repayments.
  • If you’re taking your remortgage over a longer term than your existing mortgage, the total cost you repay will increase.

If you’re interested in remortgaging your home and would like to know if you’re eligible, please talk to our team of expert mortgage advisers and we’ll talk you through your options. Call us on 08454 500200 or click here to make an enquiry.

How does remortgaging work?

You may well have heard of remortgaging but never fully understood what it means. In layman's terms, remortgaging is when you look to move from one mortgage deal to another, either sticking with the same lender or moving to a new one.

A mortgage is likely to be your largest financial commitment lasting you many years, but you don’t necessarily have to stay on the same mortgage as the one you initially took out, as your personal circumstances may, and probably will, change over the years, giving you a reason to remortgage.

Just as you did when you took out your first mortgage, it’s important to reevaluate your finances every now and then, and consider all your options in order to know you’ve got a mortgage that is right for you at that moment in time.

What is remortgaging?

Just as you might shop around for the best broadband deals and the cheapest energy rates, the same applies to your mortgage. You can shop around to see if there is an opportunity to save money.

If you do find a cheaper mortgage rate, you could end up switching onto the new mortgage deal, and this is what’s known as remortgaging.

Things to consider

Before you decide to go ahead and switch onto a new mortgage deal, it’s worth weighing up a few things first:

  1. Check if your new lender is offering a fee-free mortgage (many lenders will write to you near the end of your current mortgage term and offer you a new deal to switch to), or if there is a product fee involved as this could counteract the savings you could have made by remortgaging.
  2. There may be an early repayment charge on your current mortgage that you have to pay off before you can switch to a new deal. Again, this could outweigh the benefits of switching.
  3. The lower your loan-to-value (LTV), the more mortgage deals that may be available to you. You can work out your LTV by dividing your outstanding mortgage balance by your property’s current value. For example,

Your outstanding mortgage is £100,000. Your property is valued at £250,000.

100,000 divided by 250,000 is 0.4.

0.4 x 100 = 40

So your LTV is 40%

  1. Make sure you're mortgage ready. Just because you have a mortgage already, doesn’t mean the same checks won’t be carried out when you apply for another one. Make sure your credit score is healthy as the lender will still perform the same affordability checks.
  2. Consider speaking to a mortgage adviser. Our mortgage advisers understand the criteria that lenders are looking for and can compare mortgage deals to help find the right one for you. We have access to over 90 lenders and can search 12,000 mortgages, saving you time and taking the hassle out of doing it yourself.

When and why do most people remortgage?

There are various different reasons why people choose to remortgage. Some of these might include :

  • Take advantage of low interest rates
  • Your current fixed deal is up for renewal
  • You want to move from interest-only to repayment
  • You want to be on a better rate than you're currently on
  • You want to be able to make overpayments
  • You want to borrow more money

For instance, you may have initially taken out a fixed rate mortgage where you pay the same amount every month and the interest rate stays the same. However, once this initial period has ended (it could have been a 2,3,5 year fixed) you will fall onto a standard variable rate (SVR) where you could end up paying a higher interest rate than you were previously. This is usually the time when many homeowners look to remortgage in order to switch to a better mortgage deal.

If you’re keen to remortgage your home, you should take advice from an independent mortgage broker who will be impartial and have access to a wide range of products on the market. Call us on 08454 500200 or click here to make an enquiry.

We started our enquiry not really knowing where we wanted to live or if indeed we were ready to buy our first house. I was passed through to Chawley, the mortgage consultant, and he was fantastic throughout. He took the time to explain things surely out of his remit and became someone I trusted quickly. Once we found our now home Chawley helped with the offer process and even some elements of the home buyers report. Cara helped at this point with insurance and updates, and was also great to work with. Throughout the entire process we felt like Chawley was the only person we worked with who took the time to really make sure we understood the lingo and the market. Thank you!

Becci

August 2020

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