The Straightforward Guide To Remortgaging
18th January 2017
Remortgaging is the process of switching from one mortgage to another. There’s no specific ‘remortgage’ product, so you have a wide range of mortgage deals to choose from. Remortgaging could save you a lot of money and new online services like Trussle can make the whole process very straightforward.
We’ve outlined some of the key things you’ll want to consider:
What is remortgaging?
Remortgaging is the process of switching from one mortgage to another, and often involves moving from one lender to another in search of a better deal. The process will be familiar from when you took out your initial mortgage, and will include credit checks and a property valuation.
Once your new mortgage has been agreed, your lender will pay off the money owing on your previous mortgage and take on the new loan. You’ll then make mortgage repayments to the new lender at the new rate that was agreed.
The most common reason to remortgage is to save money. When you first take out a mortgage you’ll be offered an introductory rate for a limited period. Once this period ends (usually after two to five years) you’ll be switched to your lender’s Standard Variable Rate (SVR), which tends to be much higher.
Remortgaging at the end of your mortgage’s initial term means you avoid paying the SVR, which could reduce your payments by thousands of pounds a year. Research carried out by Trussle and YouGov revealed that switching from an SVR of 4.63% to an initial rate of 1.39% could save £3,500 per year during the new initial period (based on a mortgage amount of £173,400 repayable over 25 years).
Trussle mortgage adviser Ryan Tuff says: “The key thing is to make sure you don’t fall onto your lender’s Standard Variable Rate. Doing so can be extremely costly. Look into switching around three months before your initial period ends to prevent paying more than you should.”
When should I remortgage?
Ideally you should start the process of looking for a new mortgage about three months before the end of your initial term.
Make the move too early and you may be subject to an Early Repayment Charge (ERC), but leave it too late and you may be moved onto your current lender’s Standard Variable Rate before your new mortgage is in place.
A free mortgage monitoring service from Trussle will notify you when it’s time to make the switch.
For more details, read When To Remortgage (And When Not To).
How do I remortgage?
You’ll need to look at the paperwork for your current mortgage so that you’re clear about when your initial term ends and what fees may be incurred by switching early.
The next step is to think about the kind of mortgage you want; including the product type (fixed, tracker, or variable), whether you want to pay an interest-only or repayment mortgage, and how long you want the total mortgage term to last.
You’ll then need to research which remortgage deals are available by speaking to a broker, talking to your lender, or using a remortgage comparison site. You’ll find more details of how to find the right mortgage provider for you in the section on where to remortgage below.
The final stages of the remortgaging process will be agreeing the new mortgage. This will involve credit checks and a valuation of your property.
For more details, read How To Remortgage (In 6 Simple Steps).
Where do I remortgage?
You have four main options to consider when deciding where to remortgage:
You could speaking to a number of lenders directly, comparing their mortgage products against each other. You could also use a comparison site to quickly find out which products could be suitable for you. However both these approaches could be tricky if you’re not familiar with the complexities of mortgage products.
Speaking to a traditional mortgage broker will ensure you consider a wide range of products and receive expert advice, but can be time consuming scheduling phone calls and filling out paperwork.
Alternatively you could use an online broker like Trussle to receive a quick and hassle-free service, with a qualified mortgage adviser at the end of the phone should you want to speak directly.
For more details, read Where To Remortgage (Saving Time And Money).