Remortgaging your home could save you thousands of pounds a year, or even help you to borrow more money. We look at when and how to go about remortgaging your home, and how we can help you make the most of it.
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Looking to remortgage from your existing mortgage deal?
If you’re looking for a remortgage deal in Berkshire or surrounding areas, let Simmonds Mortgage Services help you to secure the best outcome. We can research every deal on the market to see which is the most beneficial to you, depending on your needs.
What does it mean to remortgage?
Remortgaging is simply changing to a new mortgage deal. You may choose to remortgage your property with a different lender or simply take a product transfer (remortgage onto another product with your current lender).
The majority of those looking to remortgage want to save money, but some also look for a new deal with greater flexibility, such as the ability to make mortgage overpayments, or offset their savings against mortgage interest.
Another common reason is to borrow more money against your home to fund home improvements or large one-off purchases.
Why should you consider remortgaging from your current mortgage deal?
There are a wide range of circumstances where remortgaging would be beneficial, such as:
When your current mortgage deal ends
If you’re on a fixed-rate deal or the introductory period of a variable-rate deal, you will be transferred onto your lender’s standard variable rate (SVR) when your existing deal ends.
A lender’s standard variable rate is set at a higher level of interest, so it’s highly likely that your mortgage payments will increase if you do nothing.
You can look for the right deal up to six months before your current deal ends to lock in the best remortgage rates early.
Using a remortgage calculator can guide you at the beginning of the remortgaging process, however, it’s best to check in with a broker like ourselves to ensure you secure the best deal available for your circumstances.
To benefit from lower mortgage repayments
New mortgage deals become available every day, so if you see an interest rate that’s much lower than the one you’re currently on, this could substantially lower the repayments on your mortgage.
It might be worth switching even before your current mortgage deal ends. However, be aware of early repayment charges, as they can outweigh the benefits of remortgaging early.
An increase in property value
If your property value is higher than when you bought, you will have gained equity in your home, which reduces the loan-to-value ratio of your borrowing.
Lenders will be able to offer more competitive mortgage rates to those with a greater level of equity, so this is certainly a good time to compare mortgage rates.
To reduce your mortgage term
Some people want to make higher monthly repayments on their mortgage in order to reduce the mortgage balance and pay them off more quickly. However, a high early repayment charge often prevents homeowners from overpaying their mortgage by more than 10% of their balance each year.
A mortgage provider with more flexible terms, such as the ability to make larger overpayments, or perhaps to offset savings against the interest would result in helping you repay your mortgage early. Not to mention the fact that you would save money on interest overall
To borrow more money
Many people look for remortgage deals to increase their borrowing. This can either be done with the same lender (although they may want you to take out a separate loan for the additional borrowing) or with a completely new mortgage lender.
Your monthly payments will go up if you increase your borrowing, of course, but the amount they increase by will depend on the interest rates on the new deal and how much equity you have in your home.
A common use of additional borrowing is to expand or improve your existing home, however, the majority of lenders will allow the money to be used for any legal purpose.
If you’re looking for first-time buyer mortgages for higher income earners, it’s, therefore, best to use the services of a broker, such as ourselves.
We can not only ensure we approach a lender who will be able to increase how much you can borrow, but ensure you get the most competitive interest rate available to someone in your circumstances.
How does remortgaging work?
The remortgage application process is very similar to when you took out your initial mortgage, as you will still need to meet the eligibility criteria of the new mortgage provider, and they will still need to evaluate your home’s current value.
A product transfer can be simpler, as you won’t usually need to have your finances and credit score reassessed unless you are increasing your borrowing, however, bear in mind that a new lender may be more likely to offer you a better deal.
What is needed to qualify for a remortgage?
When you apply for most remortgage deals you will need to have the same or better financial circumstances as when you applied for your original mortgage, especially if you intend to borrow more. You will also need to have a respectable credit rating, although this is not as important as with your first mortgage application, and a minimum level of equity in your home.
The minimum level of equity you will need will vary from one lender to the next, but if you’re looking to save money with a more competitive interest rate, then the greater level of equity you have in your home, the more you’re likely to benefit.
Equity is the portion of your home that you own, so will consist of your deposit, and however much you have repaid up to this point. Any increase in your home’s value will also increase your equity and lower the loan-to-value of your borrowing, therefore giving you access to better rates
Simmonds Mortgage Services; securing you the best remortgage deals
Every mortgage application can be stressful, remortgages included, so to ensure you’re getting the most suitable and competitive deal for your circumstances, speak to us, here at Simmonds Mortgage Services.
We will look at all the deals available and tailor our search to those that offer the greatest benefits, based on your personal goals, whether that’s saving or additional borrowing.
Do I need a deposit to remortgage?
You don't need one, as your equity will act as the deposit for a remortgage, however, offering a cash deposit on top of your equity can help you meet the eligibility requirements or get more competitive interest rates.
Can you get refused a remortgage?
It can be more difficult to remortgage if you don't have enough equity in your home, or your financial circumstances have worsened since you took out the original mortgage.
It will not usually be possible to remortgage if you are in negative equity - this is where you owe more than the current value of your home, and usually occurs when property prices fall.
How many times can you remortgage a property?
You can remortgage as many times as you want to, but bear in mind that each remortgage incurs fees. At some point, the fees will outweigh the benefits of remortgaging for a better rate of interest.
Does credit score affect remortgage?
It can do, but a lower credit score will be less problematic when you remortgage than when you take out your first mortgage, especially if you have a good amount of equity in your home.