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How To Remortgage

How to remortgage your home

Heather

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Heather

Last updated Tuesday 20th April 2021

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If you’ve never done it before, remortgaging your home can seem like a mysterious process. How does remortgaging work? Where do you start? What are the benefits?

If you’re looking for help in switching to a new mortgage, you’ve come to the right place. Our team of brokers have partnered up with Mortgage Advice Bureau to bring you this guide to the ins and outs of the remortgaging process.

Can’t find the answers you’re looking for? Get in touch for tailored advice on your home.

What is a remortgage?

Put simply: remortgaging means arranging a new mortgage for a property you currently own.

You might choose to remortgage because…

  • You’re interested in moving your mortgage to a different lender or to a new deal.
  • You want to borrow more money on top of your existing mortgage.

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Why choose to remortgage?

It’s common for projects such as big renovations or extensions to be funded through remortgaging, as it allows you to release funds you’ve already accumulated in your home.

In a lot of cases, remortgaging is a cost-effective way to finance a project, as you’ll likely get more favourable rates than an unsecured personal loan, alongside access to more funds.

However, if your motive for remortgaging isn’t based on releasing cash, you can opt for a ‘like for like’ amount of borrowing on your mortgage. This opens up two potential options: remortgaging or a product transfer.

What is a product transfer?

If borrowing extra money isn’t your end goal and you like your current provider, you might opt for a product transfer. This would allow you to find a new mortgage rate, without switching to a new lender, by creating a ‘like for like’ mortgage.

Remortgaging

Pros

  • Exploring all available competitive mortgage options can allow you to find one that suits your needs and save money too, should a lower interest rate be on offer.

  • For homeowners currently on a Standard Variable Rate (SVR), you have the chance to potentially reduce your payments.

  • Remortgaging is an attractive option for renovators, as it allows you to borrow a significant amount of money and is likely to have better interest rates than high-street personal loans.

  • Depending on who you manage the financing of your project, it could be possible for the added value your renovation creates to be utilised to get you a better remortgaging deal.

Jules Renovation
Remortgaging lets you borrow a significant amount of money for renovation projects like this one.

Cons

  • Remortgaging does mean going through a full mortgage application again, whereby you and who else is named on the mortgage, will need to disclose your financial details. This includes your income, monthly expenditures, as well as debts.

  • Your home will need to undergo a Mortgage Valuation. This involves a surveyor visiting your property to map out its condition. Some lenders will expect you to cover the cost of this service.

  • Undergoing a remortgage will require a Solicitor or Licenced Conveyancer to manage the process on your behalf. If you don’t have a preference, some lenders do offer a ‘panel’ of legal professionals for you to choose from. Some may even cover the legal costs involved, but a lot won’t. Therefore, you’ll need to discuss what costs are involved and adjust your budget accordingly.

  • Another fee to bear in mind is the one some lenders charge for taking on certain mortgages, such as a product fee attached to a five-year fixed rate.

Product Transfer

Pros

  • Because you won’t need to undergo a full application, as you would for a remortgage, is usually much quicker.

  • A product transfer application doesn’t require the same level of paperwork - another time saver.

  • It can also be more cost-effective in terms of fees, as you won’t be covering legal fees of a Solicitor or Licensed Conveyancer.

Document hand over
A product transfer does not require a full application, so need to to pay for Solicitors or Licensed Conveyancers.

Cons

  • Unlike a remortgage, you won’t be able to use a product transfer to raise money for any desired projects.

  • Because you’re staying with the same lender, your options will be limited and you may miss out on lower interest products.

  • Want to add a partner to your mortgage? Then a product transfer won’t be for you, likewise if you want to remove a partner from the paperwork. In these scenarios, you’ll need to undertake a remortgage.

How to start remortgaging your home

If remortgaging is the route for you, here are the steps you’ll need to undertake…

Get your paperwork in order

To keep things moving smoothly, it’s recommended that you get your paperwork in order before you start the process. At the very least, you should have a record of your latest mortgage payments and bank statements.

Reach out to a mortgage advisor

Unless you’re a financial wizard, you should be consulting an experienced mortgage advisor to understand your options. A good advisor will not only be able to breakdown your borrowing options, they’ll also be able to assess your current mortgage to check for any restrictions.

Mark
Resi's in-house team of financial experts help homeowners get tailored mortgage advice.

Find a new mortgage

Working with your mortgage advisor or through your own research, you’ll explore the market and select a new mortgage for your home. It’s likely your decision will be based on both rates on offer, as well as the fees involved. Remember, you’ll potentially need to cover: legal fees and valuation costs.

Consult with your existing provider

Before you press the eject button, it’s worth consulting with your current provider to see if they’re willing to match the competitor. While it’s not guaranteed, if a provider is willing to offer a similar deal, you could save you both time and money to stay put.

Start your application

In order to get the ball rolling, you’ll need to complete your lender’s application form and submit yourself for a financial assessment (this is where all those bank statements will come in handy).

Once your identity and finances have been confirmed, you’ll be offered an agreement in principle. From here a survey of your home will be carried out, and you’ll be asked to settle all the fees associated with the process.

With your payments covered and your home assessed, a mortgage offer will be sent over for you to review. If you agree to what’s on offer, you’ll need to wait for a completion statement for things to be official.

Overall, you should expect the entire process to take at least a month.

Conclusion

Whether you want to get a better deal or release equity from your home, a remortgage could be just the answer. However, before you dive in, it’s worth nailing down your motivations and options.

You’ll not only need to assess the terms of your current mortgage, but it might also be worth considering product transfer and the benefits this route provides. Likewise, if you find a better rate elsewhere, you should discuss this option with your current provider, just in case they’re willing to match this deal.

Above all else, if you’re new to the process, having an experienced mortgage broker by your side can make all the difference. Even if you just need help working out the steps you need to take, a consultation could provide the confidence you need to get started.

Book a free no-obligation consultation here.

Remember:

  • Your home may be repossessed if you do not keep up repayments on your mortgage.
  • There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
  • The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.

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