Remortgage

Home Remortgage

 There are many reasons why you may want to remortgage. You might have simply come to the end of a fixed rate or discounted rate and you need to arrange another deal. 

Or you may want to capital raise. The money raised could be used for home improvements, or maybe a deposit for a buy to let or some other purpose

Every homeowner should review their mortgage periodically to ensure they are getting the best deal. A good time to do this review is when your fixed or discounted rate mortgage comes towards the end of its benefit period

We shall discuss some key issues involved in remortgaging

Remortgaging can be frustrating with lenders making a myriad of background checks. Mortgage Brokers such as Mortgages Direct are aware of the lending criteria and can help reduce the chance of a declined application 

Need some help, we can help you navigate your way through to the best deals - please phone 01722 415389 or complete the enquiry form.

Remortgage for home improvements

If you want to raise capital for home improvements or to buy a car, then re-mortgaging may offer the prospect of some low interest finance.

This arrangement may suit you as it will make capital available for a low monthly outlay.

You should bear in mind that the additional capital will be added to your existing mortgage and paid off over the mortgage term. This will mean that over the mortgage term you may pay back more interest than you would have done had you taken a loan over a shorter term

Remortgage for Debt Consolidation

You may have built up debts on a credit card or personal loan. These sources of borrowing are likely to charge much higher rates of interest. Remortgaging can be used as a means of consolidating your debt into a lower, single monthly payment.

You should consider that you will be moving borrowings that are 'unsecured' to your mortgage which is secured against your home. If you are unable to maintain your new mortgage payments then your home may be repossessed

The additional capital borrowed will be added to your existing mortgage and paid off over the mortgage term. This will mean that over the mortgage term you may pay back more in interest. 

Remortgage to lower your mortgage payments

When a mortgage is taken out, most people take a mortgage with a fixed or discounted rate for the first few years. These interest rates are typically lower than the lenders standard variable rate and are offered as an incentive to attract new borrowers.

At the end of the fixed or discount rate period, your mortgage will revert to the lenders standard variable rate. At this point you should consider whether there are any better deals available.

It is in every borrowers interest to check their loan arrangements regularly. The size of the mortgage loan means that a small difference in interest rates can mean quite a large difference in the mortgage repayments.

Some lenders will seek to retain their clients by offering follow on discounts or fixed rates. Before accepting these rates, Have a look at what other lenders can offer. We can help compare mortgage options offered by your current lender with those available on the open market

Remortgage - Fixed, Capped or Discounted Rate

Your choice of mortgage type may be influenced by a number of factors:

Interest Rates:  

Movement in interest rates will affect all variable rate mortgages. The Bank of England base rate represents the cost of borrowing to the lending institutions and any variation in this rate will affect mortgage rates.

To see how interest rates have varied over the years, please see the following link to the Bank of England base rate table and chart

http://www.bankofengland.co.uk/statistics/Documents/rates/baserate.pdf

You will note that over the last 30 years there has been a declining trend in interest rates from a peak of 16% in the 1980's to the recent low of 0.1%. You could view this as evidence that rates are likely to rebound. 

The recent resurgence of inflation has caused the Bank of England to raise interest rates in 2022. We don't know by how much rates will rise. It is likely that the Bank of England will watch how inflation progresses and they may judge that further rises are necessary

Why does the Bank of England raise interest rates

The Bank of England is entrusted with keeping Inflation within an acceptable range. By raising interest rates they force people to pay higher mortgage premiums which makes them less able to spend money on other things. This reduces demand and hopefully lowers prices. Higher interest rates also increases the interest cost for businesses making them less able to borrow and expand and less willing to pay higher wages

One of the risks of raising interest rates is that it will tip the UK economy into recession

Attitude to risk

Interest rates can rise as well as fall. If the thought of rising interest rates concerns you then you could consider either fixing the interest rate or alternatively applying a cap, or upper limit to the rate. 

You can generally fix the mortgage interest rates for between 2 and 5 years. You should bear in mind that you will need to arrange another deal at the end of the fixed rate chosen and rates may be higher in the future than they are now

Income and outgoings

Your personal situation may dictate which scheme to choose. If your income is limited for the next few years then fixing the interest rate may be sensible. If on the other hand you are aware that you will be receiving a cash lump sum then flexibility may be more important

Early Repayment Charge

Early repayment charges may affect you if you sell or re-mortgage your property during the benefit period. What is less often understood is that you can be penalised even if you make a part repayment. It may make sense to delay a large overpayment until you reach the end of a early repayment charge period.

Think about your future plans:

Are you thinking about moving house, if so when might this happen.

Is it possible that in the foreseeable future, you may receive a cash lump sum - would you want to pay off some of your mortgage, if so when might this occur.

Would you be interested in making monthly overpayments and so paying off your mortgage early.

Comparing mortgages

Try out our find a mortgage facility

Or for a quick overview of current mortgage rates check out our best buy mortgages

Please complete the Your Enquiry form with your enquiry.

You can discuss your situation with an advisor on 01722 415389. 

Mortgage Term

The longer you hold a mortgage, the more interest you will pay to the lender. It is in your interests to pay off your mortgage as soon as possible.

If this is a pound for pound remortgage then providing the term of the mortgage remains the same you should be able to directly compare the new monthly mortgage payments with those of your existing lender. 

You can choose a different term to the term of your current mortgage. If your mortgage is capital and interest then if you extend the term you will reduce your monthly mortgage payments. If you extend the term of your mortgage then you will pay back more interest to the lender, over the term of your mortgage

If your mortgage is interest only and backed by an investment policy then the term should correspond with the maturity date of your investment.

 How long will a remortgage take

Typically, three weeks from application to mortgage offer, another three to four weeks from offer to completion. The time taken depends on the lender and the speed of the legal team processing your application. With remortgage applications, the mortgage lender may offer conveyancing as part of the remortgage package. In this situation, the appointed Conveyancer is unlikely to begin work until the mortgage offer has been issued

Please feel free to contact us if you have any query. Remember, there are no Broker fees providing your mortgage is at least 100k