For many borrowers coming to the end of their fixed rate mortgage, remortgaging is the best way to secure another fixed term.
In this article, Chief operating officer of LDN Finance Greg Cunnington explains what a remortgage is and what to expect during the process.
What is a remortgage?
Remortgaging is what occurs when your existing mortgage product rate is coming to the end and you switch to a new deal. This is either with your existing lender, or with a different provider who may offer a more competitive rate. Normally it occurs when you are remaining in your current house so the new mortgage is secured against the same property.
Remortgage rates tend to be more competitive if you have more equity in the property; you’ll lower your loan-to-value (LTV) which is the amount you are borrowing as a percentage of the value of the house.
As well as securing a new rate, there are other reasons the clients choose to remortgage. These include:
- Releasing money for home improvement work, for example a new kitchen or bathroom,
- Fixing your mortgage rate for stability in your monthly payments,
- Debt consolidation,
- Releasing money to use towards a new property purchase, such as a second home, holiday home or an investment property.
When is the best time to look at my available remortgaging options?
At LDN Finance we suggest looking at remortgaging options up to 6 months before your current fixed or tracker rate mortgage is due to end. That way, the most suitable rate can be secured as early as possible. Additionally, if mortgage rates rise, then the rate is already secured. In the current climate of rising interest and mortgage rates, the sooner you can lock in a new mortgage rate for your remortgage the better.
If your current mortgage is on your lender’s standard variable rate (SVR) then you should review your remortgage options immediately, especially during times of inflation. The chances are that you are currently spending a lot more on your monthly payments than you could be when compared against a new fixed rate.
What is involved in remortgaging?
After comparing the products on offer, If you do change to a new lender the remortgage will need a new application, and along with it new affordability checks and paperwork requirements. Using an adviser will ensure only rates that work with your circumstances will be recommended to you, and that you get the best product available in the market for your circumstances.
It’s also part of the adviser process to carry out a lot of the heavy lifting during the process, taking the hassle away from you. Your adviser will submit the application on your behalf, take care of the paperwork and remain on top of the application as it progresses through the process to mortgage offer and completion.
Once the mortgage offer has been issued, if moving lender then a solicitor will be appointed by the new lender to take care of the legal paperwork and a signed deed will be sent to your new mortgage provider. The new lender will then pay off your existing mortgage by sending funds to your current lender via the solicitor, you will not be required to facilitate this. Once the old mortgage has been repaid in full, you will start making the repayments to your new lender. An adviser will help liaise with the solicitors and yourself for this part of the remortgage process also.
What are the financial benefits of remortgaging?
Remortgaging can save you thousands of pounds in interest, as well as releasing some equity to pay for home improvements or other projects. By discussing your options with an adviser, you will be able to review your options.
How can a mortgage adviser add value to my remortgage?
There is no doubt that a good adviser will add value to your remortgage process due the knowledge that they hold. With extensive experience of the market, an adviser will search for the best possible deal and arrange for a new mortgage to be put in place based on your affordability and circumstances.
It’s important to look for an adviser that has access to the vast majority of lenders available in the market. This means that all of the best options will be reviewed and compared before being presented to you. At LDN Finance our multi-award-winning and experienced advisers are on hand to discuss your remortgage options today. Contact us via our online form or call 020 3903 9875 to get started.