People remortgage for a variety of reasons. You may simply want a better deal than your current one or want to avoid paying your current lender’s standard variable rate. Or you might want to free up some equity to build an extension or do home improvements. Or perhaps your circumstances have changed, and you need to change the terms of your mortgage, for example, the number of years you want to pay it off.
Can I borrow more money against the value of my home?
Yes, if you wish to remortgage and borrow more money against your home this is known as ‘capital raising’. Reasons you might do this include home improvements, buying out an ex-partner, to pay for a wedding or a new car, repaying a Help to Buy loan, debt consolidation or staircasing to buy a greater share of your shared ownership property.
A word of caution: it’s always important to consider the effect of increasing your mortgage borrowing as this is secured against your home, and it might make the mortgage harder to pay if you run into financial difficulty.
Another important consideration is the cost of borrowing. Low interest rates available on mortgages can make it appear attractive to add things to your mortgage, but because your mortgage is a longer-term agreement it may cost you more in interest in the long run.
How does the remortgaging process work?
Remortgaging sounds complex but it’s actually quite straightforward. First, we do an initial mortgage assessment and gather the relevant paperwork. We then look at your options and find the best deals for you. We then apply for your remortgage. Once we have the offer, we’ll work with you and your solicitor on the paperwork and complete the remortgage.
Do I need a mortgage adviser to remortgage?
No, but we do recommend it! And that’s not just bias talking. As mortgage experts, we know the industry inside and out, so know which lenders will be most suitable for your circumstances, saving you time and money. We don’t charge fees for our advice either, so it really is about finding you the best deal.
If it’s best to stay with your current lender, we’ll let you know and secure you a great new deal with them. We can also talk you through the pros and cons of additional borrowing and how best to set this up.
With remortgaging, it’s all about timing, getting a new deal just before you switch to your current lender’s expensive standard variable rate. This is something we’re masters at.
Is remortgaging expensive?
Often lenders will offer reduced or free remortgage packages to encourage you to mortgage with them. Our job is to work out the best option for you and consider any fees that may apply.
What remortgage fees can I expect to pay?
Here’s a breakdown of some of the fees you might need to pay if you remortgage:
Lenders often offer a range of mortgage deals with and without an arrangement fee. Deals with lower interest rates usually have an arrangement fee, and the higher equivalent may be offered without a fee.
The bigger your mortgage the more likely it is you’ll be better off paying an arrangement fee to secure a lower interest rate. We’ll work this out the best deal for you as part of our advice.
As part of the remortgage process, you’ll need a solicitor to handle the legal work of removing one lender’s interest in the property to your new lender.
Often, the basic re-mortgage solicitor work is paid for you by the new lender, either by them appointing and paying for their nominated solicitor, or by giving you a cashback to pay towards your preferred solicitor.
When you remortgage, you don’t need to pay tax (Stamp Duty, Land Transaction Tax or Land and Buildings Transaction Tax), unless there’s a requirement to transfer the legal title of your residence as part of the remortgage contract.
The new lender will want to value your property to make sure the value you disclosed is accurate. This fee is normally paid by your mortgage lender.
Management company fee
If you live in a leasehold property or a house that was recently built, then you’re likely to have a management company that you pay a maintenance fee to. This company will often have an interest on your property and need to be notified of your re-mortgage. They will usually charge a fee of £50-£100 to respond to this request.
When you end your mortgage with your existing lender, you might need to pay some closing fees. The administration fee for closing your mortgage is typically £50-£250.
If you end your existing mortgage while you are still in your mortgage product period, e.g. your fixed rate or discounted period, then it’s like you’ll need to pay an early redemption charge (ERC). This can be expensive so make sure you find out about this before you look into remortgaging. It’s worth asking your lender for a redemption statement, as this will give your current balance and any fees required to close your mortgage.
What is a split term remortgage?
This is a little used option that can benefit you if you need to borrow more money on your mortgage. Some lenders will allow you to take extra borrowing over a shorter term to allow you to repay it quicker than your main mortgage account.