Is it time to remortgage & what is the remortgage process?
Posted on 1st September 2022 at 11:11
If you’re a homeowner, remortgaging might be the next step for you.
Let’s dive into what exactly remortgaging is and why it might be beneficial.
As we continue to move through this period of financial uncertainty and the ongoing cost of living crisis, it’s important to find quality financial advice to ensure you understand your financial position and are working towards achieving your long-term financial goals. As there is a lot of concern around how families are going to afford their monthly bills and many employees face the real possibility of losing their job, this is something that needs to be a priority.
The mortgage process can often feel overwhelming. As discussions around stamp duty, credit checks, 95% mortgages, loan to value, agreement in principle, decision in principle, credit score, current accounts, deposits… (the list goes on) become increasingly important, the value of having a knowledgeable and experienced adviser becomes clear.
Are mortgage brokers and mortgage advisers different?
No, the terms mortgage adviser and mortgage broker both refer to mortgage professionals who have passed a CeMAP qualification and can provide advice on mortgae products from different lenders.
Why do I need to use a mortgage adviser?
Our mortgage advisers can offer bespoke advice based on your individual circumstances. They can talk you through the mortgage process, step by step, answering any questions you may have and supporting you through the entire process. They also have access to the whole of the mortgage market to ensure a wide range of options are explored.
What is the mortgage process?
There are many steps involved in obtaining a mortgage and you can find out how it all works on our dedicated mortgage process page.
What is remortgaging?
Remortgaging is the process of moving your mortgage from one lender to another. This could be for your own home mortgage or a buy-to-let mortgage on a rental property you own.
Reasons to consider remortgaging
• If you are coming to the end of your existing rate
• You are ready to look for a better deal than your current lender can offer
• You are planning to borrow more money against your property
• You may want a more flexible mortgage deal with the option to make overpayments
• The value of your home may have increased and changed the loan to value ratio (LTV), meaning you may have access to a wider range of products
What is a product transfer?
A product transfer is when you move your current mortgage deal to a new one with the same lender, usually at the end of a fixed term. As your existing lender has all your information, this is usually a straightforward process. There are usually no extra fees, unless a product with an arrangement fee is chosen, or legal work is involved as you are simply moved onto the new deal on the fixed-term start date. It’s certainly worth taking advice from a mortgage adviser as a product transfer might not be the most competitive or suitable option for you at this point.
What is the remortgaging application process?
Your current lender or mortgage adviser will contact you as your current mortgage product comes to an end. At this point, you may have a discussion with your mortgage adviser about your financial circumstances and plans for the future. Your adviser will provide a solution best suited to your individual requirements and if you are moving to a new lender, a solicitor will be instructed.
When you are ready to apply, your adviser will approach the lender for an Agreement in Principle (also known as a Mortgage in Principle). Documents will be collated for the eligibility and affordability checks by the lender. The lender will instruct a valuation of your property during the application process. When your application is fully underwritten and approved, a mortgage offer will be produced. The solicitor (conveyancer) will finalise any legal work and drawdown the funds from the new lender and repay the current lender. The new mortgage is then registered at Land Registry and the process is finished.
When can I remortgage?
You can remortgage your property at any time. However, be aware of Early Repayment Charges (ERCs) and possible exit fees if you are still within your fixed rate. For this reason, many people choose to consider remortgaging towards the end of their fixed rate. If you choose not to remortgage at the end of your fixed rate, you will most likely be moved onto your lender’s standard variable rate (SVR) and could end up with higher monthly payments.
How long will a remortgage take?
Remortgaging your home typically takes around 4 to 8 weeks after applying. The amount of time needed will depend on your individual circumstances and remortgage needs. Working with an experienced mortgage adviser may help to speed this process up by ensuring all the relevant, accurate documentation is collated and submitted correctly in the first instance.
What are the costs involved in remortgaging?
• booking or arrangement fees charged by a new lender (not always the case)
• conveyancing costs (usually covered in full by the new lender)
• property valuation costs (usually covered in full by the new lender)
• early repayment charges (ERC) or exit fees charged by your current lender
• possible mortgage adviser fees
Will I need a solicitor to remortgage?
Yes, you will need a solicitor (conveyancer) to take care of the legal aspects of your remortgage. Your conveyancer needs to verify your identity and your ownership of the property. They also need to register the new mortgage provider with the Land Registry and arrange the release of the funds.
When remortgaging, the cost for legal work/solicitor/conveyancer, is usually covered by the new lender.
Points to consider
1.What do you want from your new mortgage?
2. What will it cost to leave your current mortgage?
3. Has your employment status changed?
4. Which mortgage products are available?
5. How is your credit score?
6. How much can you borrow?
7. Have your family circumstances changed?
8. Have you reviewed your protection requirements recently?
What are Protection Requirements?
Protection insurance is an umbrella term used to describe insurances which provide cover for you and your loved ones in the event of your death or illness. Such insurances are typically life insurance, critical illness cover and income protection insurance.
Do I need Protection Insurance?
Although protection insurance is not a requirement under UK law, it is highly recommended that you have a plan in place to protect your home in the event of your death, so that your mortgage can be repaid by your beneficiaries, thereby protecting the full value of the home asset. You may also wish to take out insurance to provide financial support in the event of a diagnosis of a critical illness or to protect your income in the event of long-term sickness/illness.
Do protection policies actually pay out?
According to data from Scottish Widows, 98% of all life insurance claims in 2021 resulted in a successful pay out, increasing again for the third year in a row.
How do I find out more?
Call us on 01302 866787 and speak to one of our trusted advisers.
According to our research, the content contained in this article is accurate at the time of writing.
Infomation on this website is NOT bespoke advice to its audience as therefore does NOT constitute financial advice.
Readers are encouraged to contact our qualified advisers directly for mortgage and protection advice.
As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments.
Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home.
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