Remortgages Explained

Remortgages explained

Remortgaging is something homeowners do when they want a better deal with a different mortgage lender. You may have come to the end of your introductory deal with your lender, for example, and the rate they’ve moved you to is higher than before. You may also have circumstances which would suit a particular product better. You may try to remortgage your home with a different lender and find your current one offers a great retention offer as an incentive to stay.

The chance of you remortgage application being accepted will also be higher if you own your house outright, but wish to borrow money against it. Remortgaging can also help release equity from your home, which you could use to move to another property. Always think about whether your mortgage is ‘portable’ though to your new property as you may need to pay an early exit fee. Other costs to consider include administration charges.

When is it NOT a good idea to remortgage?

While remortgaging can have its benefits and reduce your costs, there are certain circumstances under which remortgaging isn’t the right option to take. These include:

  • Your home has decreased in value
  • Your income has decreased or you’ve just become self-employed
  • You’re locked in with early repayment charges which don’t make it worth your while
  • You’ve sought advice, and you’re already on the best deal for you
  • Your credit history is poor
  • It’s not worth it i.e. you only have a small amount left on the mortgage
  • You need to borrow 90% or more of your property value
  • You think you can get a better deal at another time e.g. when mortgage rates are lower

If your circumstances dictate that you no longer fit the criteria of your original mortgage application, you may find your new remortgage application is rejected.

What are the different types of remortgage?

We’ve got several handy mini guides available for the different types of mortgages on offer, and you may find these useful when remortgaging. They include:

  • Fixed rate – fix your mortgage at a special rate for a certain amount of time
  • Variable rates – your mortgage will usually move in line with a lender’s standard variable rate (SVR)
  • Discount – a short-term deal at a reduced rate
  • Tracker – usually moves in line with the Bank of England’s base rate
  • Capped – put an upper limit on your interest rates
  • Cash back – get a percentage of your loan back
  • Interest only – only pay the interest on your mortgage while you save
  • Buy to let – buying a property to let out to others
  • Let to buy – letting out your own home
  • Bad credit – advice for those with a bad credit rating
  • Guarantor – a nominated individual will be liable if you can’t pay
  • Flexible – overpay on your mortgage to compensate at another time
  • Self employed – advice for self employed workers
  • Self build – mortgages for building your own home
  • Offset – offset the interest with a bank or savings account

Mortgage Brokers

Use the services of mortgage brokers if you want professional advice about the best options for you. This can also help your chances of having your application accepted as they have inside information about various lenders’ requirements. It will also speed up the process, and give you the confidence that you’re finding the right option for your personal circumstances.

When looking to apply for any type of mortgage, getting professional, impartial advice can help you get the best mortgage product for you. Find a trusted mortgage adviser in your local area here.

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