Remortgage advice from members Castle Mortgages

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Here Steve McKernan from Castle Mortgages shares advice on understanding the process and what options are available.

Remortgaging could save you hundreds of pounds on your mortgage payments and ensure that you are getting the right deal from your lender. But it’s important to understand the process and what options are available before diving into it.

The process of remortgaging refers to changing your existing mortgage to a new one, either with your current lender or with a different one. It’s an important decision as your mortgage is likely to be your biggest ever financial commitment.

Mortgage term may be coming to an end

There are various reasons why remortgaging might currently be appropriate for you. Your current mortgage term may be coming to an end, and you don’t want to end up paying your lender’s standard variable rate (SVR), which can typically be higher.

Maybe you need to borrow more money for a major expense, such as moving home or funding a home improvement project, or you want to reduce your monthly repayments and find a cheaper deal with better rates.

Eligible for a cheaper mortgage

You may also want to switch to a mortgage provider that allows overpayments, or the Bank of England base rate has changed, prompting you to shop around for a more competitive rate.

Alternatively, your property has increased in value, making you eligible for a cheaper mortgage with a lower loan-to-value (LTV) ratio and you want to fix your payments and have certainty about your monthly mortgage outgoings if your circumstances change or rates increase.

Ample time to review your options
To ensure you are not paying more than necessary, it may be appropriate to consider remortgaging every few years. In addition, to make sure you have enough time to shop around and complete the application process, set a reminder for six months before your current deal ends and contact your professional mortgage adviser. This will give you ample time to review your options.
If you have paid off a substantial amount of your mortgage over the past few years and gained equity in your home, switching to a different mortgage can reduce your monthly interest payments by taking advantage of the most competitive deals available.

Most appropriate deals available
If you are considering remortgaging, it’s important to know the steps involved. Gather your paperwork and review your current mortgage deal. Take note of the type of mortgage, interest rate, remaining payment period and monthly payments. Your mortgage adviser will then discuss the most appropriate deals available.
Get a conveyancing solicitor if necessary. If you’re remortgaging with your current lender, there is no additional legal work required as it is considered a ‘product transfer’. However, if you choose another lender, you’ll need a solicitor or conveyancer to assist with the legal aspects.
The remortgaging process typically takes between 18 days to 40 days from application to mortgage offer. However, there are no hard and fast rules when it comes to the duration of the process.

Remortgage costs: Understanding the fees involved
If you’re considering remortgaging your property, it’s important to understand the fees that may apply.

Early Repayment: If you have a fixed rate or discounted mortgage deal, ending that arrangement early may result in an early repayment charge. These charges are typically calculated as a percentage of the balance still owing on the mortgage and can cost between 3% to 5%. However, they often decrease each year of a fixed term.

Exit Fees: Many lenders charge an exit fee when closing your mortgage account. This fee can be called something different depending on the lender, such as a ‘mortgage account fee’. Typically, these fees range from £50 to £300.

Arrangement Fees: Lenders may charge for various aspects of arranging your new mortgage, including product fees, admin fees or application fees. New lender arrangement fees usually cost around £1,000 but can be higher.

Legal Fees: Most legal fees involved with remortgaging are usually covered by the lender themselves. However, if there is a charge, it will need to be paid upfront and cannot be added on to the new mortgage. Remortgage legal fees can cost from £300.

Valuation Fees: The valuation fee will depend on the value of your property and varies significantly between lenders. Some lenders offer free valuations while others may charge up to £1,500.

Don’t overlook these costs before deciding whether to remortgage and which lender to choose.

When considering paying remortgage fees, you have the option to either pay them upfront or add them to your loan. While adding them to your loan is a common choice, this will result in added interest over the life of the mortgage term, ultimately costing more overall.
Want to see if a remortgage deal could help you save money?
If you want to find out if you could save money by moving your mortgage, let us know what’s important to you and we’ll discuss your options. To find out more, speak to us here or tag us on the Insiders.