Are you thinking about remortgaging your Yeovil home or property? Here at The Levels financial, our team of advisors in Yeovil have all the information you may need when you’re thinking about or in the process of remortgaging.
- What Is Remortgaging?
- Why Should You Remortgage?
- Reasons Why You Shouldn’t Remortgage
- What Type Of Yeovil Remortgages Are Available?
- See How Our Remortgaging Advisors in Yeovil Can Help You
1) What Is Remortgaging?
Remortgaging is when you choose to swap or change your current mortgage deal for a new one. Yeovil remortgaging can happen with the same Yeovil or national based lender or you can move to a different lender altogether. Your new mortgage will replace your old mortgage.
Remortgaging doesn’t mean you’re moving homes. You can only remortgage on the same property that the original mortgage was obtained for. If you’re moving house you will need to apply for a new mortgage altogether, or, look into transferring your existing mortgage to the new property (if your lender and deal allow.) You can find out more about how new mortgages work in our blog post: ‘A guide on how mortgages work?’.
While remortgaging may not appeal to everyone, the aim of a remortgage is to save you money and potentially pay off your mortgage earlier. Which, if done without incurring too many additional fees and costs, could help you to save 100s and even 1000s in the long run.
2) Why Should You Remortgage?
Many of the best mortgages will last a short amount of time, typically between two to five years. Most property owners will aim to remortgage when those fixed rates come to an end, with the aim as mentioned above to save money and potentially pay off the mortgage prematurely.
There are many reasons why homeowners may choose to remortgage, including:
- The current deal is nearly finished – after your agreed/fixed mortgage rate comes to an end, you will automatically put on a default standard variable rate, which normally will have the highest interest rates. Our advisors in Yeovil help you to find the best rates and potentially save you money.
- Your home has increased in value – due to work you’ve done on your home or the current housing market, if your house has increased in value, you may want to consider remortgaging.
- Concern over rising interest rates – any change or increase to interest rates by the Bank of England could affect any variable rates mortgage repayments – so it may be a good time to change to a fixed rate mortgage – which would give you more security over rising interest rates. Find out more in our blog post fixed mortgages vs discount variable mortgages.
- Overpayments – If your financial situation has changed slightly and you wish to increase your monthly repayments, most mortgage lenders won’t allow you to increase your monthly payments or pay off a large chunk of your mortgage. In these circumstances, it may be easier to remortgage and find a deal that works for you.
- Borrow more – you may wish to borrow a larger sum, and remortgaging may help you borrow additional funds at a lower interest rate.
3) Reasons Why You Shouldn’t Remortgage
In our experience, remortgaging in Yeovil isn’t for everyone and in some cases may not make any large or significant changes to your current financial situation. It could end up costing you more money in the long run and wasting your time.
If you already have a mortgage deal with low interest rates that fits your requirements, you probably won’t want to remortgage. There are several other factors which may cause people to decide against remortgaging, including:
- Large early repayment charge – most mortgages come with charges to prevent any early repayments. These exit fees are non-negotiable and must be paid when you’re ending your mortgage agreement early. Often these are expensive and counterbalance any potential savings from remortgaging.
- Existing mortgage is almost paid off – the closer you are to paying off your Yeovil mortgage the harder it will be to find a lender willing to offer you a loan, especially a loan with lower interest rates. Depending on how much you have remaining on your mortgage, the exit fee and cost of switching mortgage providers could cost you more.
- Home has decreased in value – taking out a new mortgage when your home has decreased in value can mean your loan-to-value ratio will be higher. (Something we cover in more detail in our first-time buyer mortgage explained step-by-step guide.) In these scenarios, it is unlikely you will find a better deal elsewhere and remortgaging could place you in negative equity.
- Low credit rating – having a low credit rating means fewer lenders will offer you a loan, making finding a remortgage with a better deal difficult. There are, however, five ways to boost your credit score with our Yeovil mortgage advisors, helping you get a better deal in the future.
4) What Type Of Yeovil Remortgages Are Available?
When it comes to mortgages and remortgages, people are often overwhelmed due to the vast amount of lenders and rates out there. When you’re mortgaging you have your first-time buyer, buy to let and shared ownership mortgages. Before you even start talking about fixed rates and so on.
It’s the same story with remortgaging, with many variations available on the market, you must know what each is and their benefits.
Fixed Rate Mortgages
Fixed rates are when your monthly mortgage repayments and interest rates will stay the same or ‘fixed’ throughout your mortgage agreements. Fixed-rate mortgages can normally be secured for two-five years. When your term finishes, if you don’t remortgage you will be moved to a standard variable rate.
| Pros | Cons |
|---|---|
| Budget friendly – you know what you’re paying each month | Could be higher monthly payments |
| No Prepayment Penalties | May be harder to qualify for |
| Good for long-term homeowners | May not be ideal for short term homeowners |
Standard Variable Rate Mortgage
Not the cheapest option for remortgages on the market and our team of advisors in Yeovil will always aim to get you the best deal possible. These are the default rates, as mentioned above, that your mortgage lender will automatically place you on when your fixed term comes to an end.
Interests will vary depending on lenders but are normally higher than the base rate from the Bank of England.
Can overpay your mortgage without having to pay a feePayments may increase past your financial means
| Pros | Cons |
|---|---|
| Lower arrangement fees | Price fluctuations – you won’t know what you’re paying |
| Can overpay your mortgage without having to pay a fee | Payments may increase past your financial means |
| Repayments can decrease interest rates | Not the best deals available |
Discounted Rate Mortgage
Discounted rates are the same as standard variable rate mortgages, however, they will include a discounted rate for a set amount of time. While this discounted rate may be lower than the lender’s standard variable rates, it may not be cheaper than others on the market.
| Pros | Cons |
|---|---|
| Lower early repayment charges | Not fixed monthly payments |
| Can have a low rate and low monthly repayments | Payment rates can increase |
| Can be used for a short amount of time | Better deals are available |
Tracker Mortgage
Tracker mortgages are mortgages which have a variable interest rate, these can be set the same, higher or lower than the Bank of England’s base rates. Tracker mortgages will track the rise and fall of the Bank of England’s rates and will change your mortgage repayments and interest rates to suit.
| Pros | Cons |
|---|---|
| Cheaper than fixed rates | Harder to budget accurately |
| Repayments fall if base rates fall | Repayments increase if base rates increase |
Gives greater flexibility with over-paymentsSome have a ‘collar’ amount they won’t fall below.
Capped Rate Mortgages
A capped rate mortgage is the same as a variable mortgage, however, a limit will be placed on how much the interest rate can increase.
| Pros | Cons |
|---|---|
| Limit risk of rising interest rates | Higher rates than other mortgages |
| Earn a high return when rates are low | Rare – not many to compare on the market |
| Repayments can fall | Harder to budget monthly accurately |
Offset Mortgages
Remortgaging with an offset mortgage can help you lower your total amount of payable interest over the term of your mortgage. This is done by offsetting the money you save against your outstanding mortgage balance.
The amount of money you have in savings will be deducted from the amount of loan that you will need to pay interest on. If you have a £100,000 mortgage and £10,00 in savings, you will only have to pay interest on £90,00 of your mortgage.
| Pros | Cons |
|---|---|
| High monthly savings | Linked saving accounts can’t earn interest |
| Increased flexibility | Payments may increase if savings are withdrawn |
| You can still add to your savings | Loan to Value ratio is often lower |
See How Our Remortgaging Advisors in Yeovil Can Help You
If you’re interested in remortgaging in Somerset, our team of mortgage advisors in Yeovil will be more than happy to assist you. Helping you find the best deals to suit your needs and requirements, as well as being there to support you through the process.
Contact us today by emailing us at admin@thelevelsfinancial.co.uk or calling us on 01458 772040.
Important information: You may have to pay an early repayment charge to your existing lender if you remortgage.
If you do not keep up with your remortgage repayments your home may be repossessed.
A fee may be included for mortgage advice. The actual remortgage amount you pay will differ depending on your circumstances. Fees can be up to 1%, but typically a fee is 0.3% of the borrowed amount.
