When you take out a mortgage to replace your existing mortgage on the property you own, this is called a remortgage.
You can also remortgage your house in order to borrow additional money against your property.
The motivation to change your mortgage is usually the prospect of saving money.
Your mortgage is generally your largest financial commitment and there is often potential to save a significant amount.
In this article, we explore two great reasons why now is the ideal time to consider remortgaging your property.
Read on to find out more or click a link below to jump to a chapter of your choice.
Chapters
Scenario #1
David’s mortgage repayments were £1,184 per month.
His fixed term had ended and so he was on the lenders standard variable rate of 4.24%.
We were able to keep David with the same lender but we switched him to a different fixed rate product which had an interest rate of 1.41%.
This meant that his monthly repayments were reduced by a huge £298 to just £886.
It was an extremely easy, paperwork free process which resulted in him benefitting from savings of £3,576 per year!
So why are people paying thousands a year in unnecessary interest costs and not remortgaging?
Having spoken to our clients it seems the most common reasons for this are:
Time
They do not have the time to look into the remortgage process.
Worries About Eligibility
Changes in their circumstances such as just changed jobs/in-between jobs/lower salary/family changes makes them worry that they would no longer be eligible for a mortgage.
Unaware
They didn’t know they were able to remortgage.
Early Repayment Fees
If they are still tied into a fixed rate deal they would have to pay early repayment fees if they left the term early.
Planning to Move
They do not want to get tied into another fixed rate term as are planning to sell their property soon.
Costs
They do not want the expense of remortgaging.
Let’s take each of these reasons and investigate them in more detail:
1. Remortgages are easier to get approved as you already have history of paying a mortgage.
This means that the remortgaging process can often be quick and straightforward.
The process generally takes about 4 weeks in total if you switch lenders.
In order to make the transaction flow more quickly, most lenders will offer their own panel conveyancer free of charge.
This fills the underwriters with confidence and it usually takes half the time to get approved vs a purchase (about 1 week).
There is no hard work or stress involved for you because as your mortgage adviser we do all the research to find you the cheapest possible product and liaise with the lender throughout the whole process for you.
2. It usually doesn’t matter if your circumstances have changed as the majority of lenders will allow existing clients to switch to another of their products with a better interest rate without having to supply any additional paperwork!
As your mortgage adviser our role is not only to advise you on the best product but also to complete the switch for you.
3. Banks make their real money out of their existing clients who simply forget to re-mortgage or those who are unaware of when their fixed term ends (although they do have to notify you within 6 months of this ending).
This is because when your fixed term ends you leave your low rate and go onto their standard variable rate which is often over 4%!
Check your mortgage documents now and look for the date when your fixed rate term comes to an end.
It is important to note that we can apply for a remortgage within 6 months of the end of term date, so if this applies to you we can get you the best possible interest rate out there now!
4. In some cases, surprisingly, it can be worth switching your product early and paying the early repayment fees, as it may save you more money in the long run.
Scenario #2
When Sarah applied for her mortgage she had a poor credit score which meant she had tied into a very high interest rate of 7.49% and was paying £1,388 a month.
She was stuck on a 5-year fixed rate and had 2 years to go.
She was going to remain on this term until it ended to avoid the early repayment fee of £4,000.
However, we were able to switch her to a different lender and a much lower interest rate of 1.54%.
This meant that her monthly repayments went down to just £689 per month.
The savings were so huge that over two years, even after paying the £4,000 early repayment fee, Sarah has saved £12,776!!
1. Don’t assume you are ‘stuck’ until your fixed rate term ends.
If you are wanting to move house during your fixed rate term, most lenders will allow you to take your mortgage with you.
This is known as porting the mortgage.
At the time you request the port you will need to meet the lenders criteria so speak to your mortgage adviser to discuss your options.
2. It is possible to remortgage without incurring any costs!
Most lenders want your business and therefore try to make it as enticing as possible to switch by offering a £0 set up fee, a free valuation and free legal fees to take care of the conveyancing side.
We are also currently running a ‘no fee’ offer on all re-mortgages, so now could be the ideal time for a cost-free switch!
Get in Touch
Having looked into these main concerns, and demonstrated how easy the remortgage process can be, why wait?
Don’t spend your hard earned money paying any unnecessary additional interest, look into remortgaging today!
Contact us to arrange an initial consultation with an experienced mortgage adviser.
Liked this article? Try reading:
What is a Mortgage Adviser & Why Should You Use One?
Disclaimer: Cormorant Mortgages does not provide advice in relation to savings and investments. This article is intended for discussion only and does not propose financial advice in any way, and therefore should not be construed as such. Your property may be repossessed if you do not keep up with mortgage repayments. You may be able to obtain cheaper deals by going direct to a lender.