Remortgaging is where you can take out a new mortgage on a house or property you already own, often with the goal of obtaining better terms and conditions. Remortgaging can involve many complex decisions, from selecting the right mortgage rate and terms for you to finding the most suitable lender.
In this article, our team of Yeovil mortgage advisors will highlight what remortgaging is, as well as a detailed step-by-step guide to obtaining a new remortgage. We believe it is important to understand all aspects of the process to make an informed decision for your future.
- What Is Remortgaging?
- When Would You Be Likely To Remortgage?
- The Pros & Cons Of Remortgaging
- How Long Does The Remortgage Process Take?
- Step-By-Step Guide To Remortgaging
- Remortgaging Frequently Asked Questions
- Get Your Yeovil Remortgage Deal Today
What Is Remortgaging?
Remortgaging is when a home or property owner chooses to move their existing mortgage deal to a new one. This can be changing the mortgage type, the amount of money borrowed, or the lender.
Remortgaging cannot be done when you’re moving home; a remortgage only applies to borrowers who are staying in the same property that their original mortgage was obtained for. It is important to note – remortgaging doesn’t have to mean you’re moving away from your current lender, remortgaging also includes changing from one deal to another from the same lender. Staying with the same lending is also know and referred to as a product transfer.
Remortgaging can be done for a variety of reasons, including reducing the monthly payments, switching to a different lender, or accessing the equity in your home. Before considering remortgaging, it is important to understand how it works and what the options are.
For more information about remortgaging, see our latest blog post: ‘four things to know when remortgaging in Yeovil’.
When Would You Be Likely To Remortgage?
You can choose to remortgage your property at any time. In some cases, getting approval for a remortgage is easier than getting approved for a brand-new mortgage on a different property.
Most people will often choose to remortgage when they reach the end of their fixed or discounted rate term, as this will often be when your existing mortgage stops being a good deal for your financial situation.
The housing and mortgage markets are constantly changing, with new deals and discounts being introduced as a reflection of the financial market. This is why, at The Levels Financial, we will work hard to always be up to date with the latest rates and government announcements. This helps us to ensure you get the right remortgaging deal for you when your existing fixed term comes to an end.
The Pros & Cons Of Remortgaging
Remortgaging is a financial decision that should not be taken lightly. Replacing an existing mortgage with a new one may offer different terms and conditions than the original contract. While there are pros and cons to remortgaging, it is important to understand both sides to make an informed decision.
Pros:
- Potential for lower interest rates due to improved credit scores or better economic conditions.
- Reduced monthly payments and overall savings over time
- Access to cash from the equity built up in a home allows homeowners to use these funds for renovation projects or other investments.
- Lower the LTV (loan-to-value) which can influence the interest rate on a new mortgage.
Disadvantages:
- You may have fees to pay when you end one mortgage loan and start another.
- If interest rates rise during the term of the loan, you may end up paying more than originally expected.
- If you’re opting to remortgage with a new lender you will be treated as a new applicant and have to undergo checks and paperwork in the initial process.
- In considering whether or not remortgaging is right for you, it is essential to weigh both the potential benefits and risks involved to make an educated decision that fits your financial situation. If you need additional information our dedicated and experienced team is on hand to answer any questions you may have.
In considering whether or not remortgaging is right for you, it is essential to weigh both the potential benefits and risks involved to make an educated decision that fits your financial situation. If you need additional information our dedicated and experienced team is on hand to answer any questions you may have.
How Long Does The Remortgage Process Take?
The timeframe for remortgaging can vary greatly depending on several factors. Generally, there are two stages in the remortgage process: obtaining approval from the lender and completing paperwork and legal processes.
The approval stage can take from two weeks to a month, while the second stage usually takes around four weeks or longer. It is important to note that this timeline may be impacted by external factors such as holidays or delays in obtaining documents from third parties.
Top Tip: It is possible to speed up the process by having all paperwork prepared before applying for a mortgage loan. Additionally, being organised and proactive with lenders and other third parties involved in the application increases efficiency and reduces delays in obtaining approval.
To complete a successful remortgage application, it is necessary to understand both stages of the process and plan accordingly which can also help to reduce delays.
Step-By-Step Guide To Remortgaging
Whether you’re looking to change your mortgage lender or find a different deal with your current lender, the remortgage process will, generally, follow the same sort of step process.
Step 1 – When you come close to the end of your fixed rate mortgage your mortgage lender may contact you, so you’ll know when your rate will be due to end.
Step 2 – Ask your lender for a closing balance statement, this will tell you the amount of money remaining in your mortgage loan (including fees). This will also be the same amount you will need to borrow when remortgaging.
Step 3: Find a reliable Yeovil mortgage advisor (The Levels Financial).
Step 4: Decide what type of mortgage you would like, our team of mortgage advisors can help you find the right deal for you and your situation.
Step 5: If you’ve decided to move to a new lender, you will need to engage the services of a conveyancer or solicitor who will be able to sort out any needed paperwork.
Step 6: You will then need to provide your lender, broker or bank with some or all of the following:
- Three months of bank statements or payslips
- Utility bills
- Credit card statements
- Three years of address history
- ID (passport or driving licence)
- Records of regular outgoings (subscriptions, loans etc)
- Proof of any bonuses or commission
- Your P60
Step 7: Your mortgage provider will check the above paperwork and will then provide you with a mortgage in principle (MIP) which is a written statement of how much they may be prepared to lend to you. Please note a MIP is not a binding contract but an indication of what you may be able to borrow.
Step 8: Your new or existing lending will arrange a valuation of your property, which confirms the house is worth the amount you’re asking to borrow.
Step 9: Using your MIP you, or your mortgage broker, will apply for your new mortgage.
Step 10: If the lender approves your mortgage application, a mortgage offer letter will be sent to you and your solicitor. The offer is usually valid for six months and outlines what the lender agrees to loan you based on your income, credit score and property value.
Step 11: If you’re happy with the mortgage offer, your solicitor will request money from the new lender to pay off the existing mortgage.
Step 12: Your solicitor will register the mortgage details with the Land Registry and the title deeds will be transferred to the new lender (if applicable.)
Remortgaging Frequently Asked Questions
Remortgaging your home can be a stressful and confusing process. Here at The Levels Financial, we work hard to ensure all of our clients have all the information needed to make an informed decision. We have answered some of our most frequently asked questions regarding remortgaging.
What Is The Difference Between Remortgaging And Refinancing?
Remortgaging and refinancing both involve taking out a new loan to pay off an existing one. However, there is a key difference between the two. Remortgaging is when you take out a new mortgage loan to replace your existing one with the same lender while refinancing involves getting a new loan from a different lender to pay off your existing loan.
Are There Any Fees Associated With Remortgaging?
It is important to consider the associated fees when deciding if a remortgage is a right option for you.
The most common fees associated with remortgaging are:
- Valuation fees – cover the cost of having your property assessed by a surveyor to determine its value.
- Legal fees – these cover all of the paperwork involved in setting up a new mortgage.
- Arrangement fees – may be charged by lenders for setting up the new mortgage agreement.
- Early repayment charges – you may need to pay a fee when switching from one mortgage to another.
How Can I Compare Remortgage Deals?
Comparing remortgage deals is an important step for any homeowner looking to switch lenders. When evaluating different remortgage deals, it is important to consider the overall cost of each option. This includes not just the interest rate but also any associated fees that may apply – as discussed above.
It is essential to obtain full disclosure of all costs associated with a particular mortgage to properly compare different deals and determine which one is most cost-effective for the individual’s needs. It is also important to evaluate the features and benefits offered by each deal. This includes taking into account both short-term benefits, such as lower monthly payments, as well as longer-term benefits such as flexible repayment options or special discounts on additional borrowing.
What Happens If I Miss A Remortgage Payment?
If you miss a remortgage payment, the lender can take legal action against you. Depending on the situation and type of loan, this could include repossession of property or foreclosure proceedings. When this happens, any equity in the home may be lost and homeowners can also face additional costs from late fees, legal fees, and other related costs incurred by lenders to recover late payments.
Missing a remortgage payment should not be taken lightly. Understanding how lenders respond to missed payments can help people make informed decisions about their mortgage options. It is also important for borrowers to stay informed about their mortgage terms and ensure they have sufficient funds available to make regular payments according to their contract with the lender.
Get Your Yeovil Remortgage Deal Today
Are you interested in remortgaging your property? At The Levels Financial, we will work closely with you to ascertain your individual needs and requirements and aim to help you get the right remortgage rate for you.
For more information, or to book an appointment, contact our team today at admin@thelevelsfinancial.co.uk or call us on 01458 772 040 and see how we can help you with your remortgage.
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.
