Remortgage on a property involves taking out a new mortgage deal on the house you already own to replace the mortgage deal you currently have.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Mortgages tend to be the largest debt that people have and quite often remortgaging can make quite significant savings on your monthly financial commitments.
The main reason people tend to remortgage is to try and save money.
Remortgage information from WPP Financial Services, Rochester, Medway, Kent, could help with this
Competitive mortgage rates usually have initial benefit periods that tend to last between two and five years, at which point you should consider a remortgage. If you are on a fixed rate mortgage in particular (or tracker or discount rate mortgage) it is quite typical that at the end of an agreed fixed term, the lender then moves the mortgage onto a variable rate mortgage which usually has a higher interest rate. Aim to speak to us around three months before the end of the term on your fixed rate deal and this will give us time to help you to find out about and set up a new mortgage deal.
Quite often there is an early repayment charge or an exit fee when you pay off your old mortgage but this amount is usually outweighed by the huge savings that will be made on the new mortgage deal. The majority of fixed rate mortgages will have an early repayment charge should you remortgage away from the existing lender within the fixed rate period. All mortgages will have an administrational fee for redeeming your mortgage even if that is outside the product period, whether that’s 2,3 or 5 years
Securing short term debts against your home could increase the term over which they are paid and therefore increase the overall amount payable. You may have to pay an early repayment charge to your existing lender if you remortgage.
If the value of your house has significantly increased you could be able to access much lower rates on mortgage deals because your loan to value (LTV) ratio is much lower meaning that you are less risk. If you come into some money you also might be in a position to pay off a large percentage of the mortgage that would allow you to be eligible for lower rates.
Remortgaging can also be used to borrow more money but this must be considered carefully and the new rates and any fees considered. You will need to be prepared to let your new lender know what the extra money is for. Home improvements and consolidating debts are typical reasons although your lender may ask for evidence. Maybe you want to be able to miss a payment. Changing jobs, going back into education, going travelling – whatever the reason, there are mortgages which will let you take payment holidays.
Should you Remortgage?
The majority of fixed rate mortgages will have an early repayment charge should you remortgage away from the existing lender within the fixed rate period. All mortgages will have an administrational fee for redeeming your mortgage even if that is outside the product period, whether that’s 2,3 or 5 years. You may also not be able to remortgage if your home’s value has decreased for example the value of the house has decreased. If you need to borrow more than 90% of the value of your property you might find that you will struggle. A change of career giving you a different financial income can also make a difference.
WPP Financial Services, Rochester, Medway, can help with this.
What is a loan-to-value (LTV) ratio?
This is a percentage of your current mortgage amount of the value of your property.
Remortgaging can often result in a better interest rate, particularly if the fixed rate, usually around 2 to 5 years, on your current deal has ended.
Most lenders offer mortgage and home-equity applicants the lowest possible interest rate when the loan-to-value ratio is at or below 80%.
The Remortgage Process
You will first need to find out from your current lender how much remains on your current mortgage and what the settlement figure would be and if there are any fees including repayment charges to pay.
WPP FInancial Services will then search for the range of rates and offers with various lenders that you are eligible for. You will also want to consider the fees involved with different lenders. When you have reviewed your options and if you have decided that it is worthwhile remortgaging and that you will see financial benefits you will then be in the position to make a mortgage application. To make the application you will require evidence of your monthly income and the documents from your current mortgage. The lender will run a credit check on you as the applicant/s and will also require a valuation to be carried out on your property.
When this is complete the mortgage application will be passed to underwriting to complete this process. Typically the processing will take up to 8 weeks so just sit back and be patient. We will be in regular contact with the lender to deal with any concerns or issues right away.
When the remortgage application has been approved the previous lender can be paid off and you will move onto your new mortgage deal and rates and can reap the rewards.