A remortgage is where you change your existing mortgage deal, either with the same lender (known as a product transfer) or by moving to another lender altogether. This is the best way to ensure you are on the best deal available to you.
Many clients opt to undertake a product transfer with their existing lender, however, is this always the best option? Some of the product transfer rates offered by lenders are very competitive, however, if you are still seeing a potential increase in your monthly mortgage payments when assessing the products available to you, it could be time to look at alternative lenders.
To speak to an impartial remortgage advisor, enquire online or call us on 0300 124 5655
- Why should I remortgage?
- Remortgage to lower your monthly payments
- Remortgage as your current deal is ending
- Can I remortgage for debt consolidation?
- Can I remortgage my Help to Buy mortgage?
- Can I remortgage with bad credit?
- Can I remortgage with my current lender?
- What is the maximum amount I can borrow?
Why Should I Remortgage?
As stated above, the number one reason people remortgage is to ensure they are on the best interest rate available to them and therefore paying less month to month. However, is the lowest rate always the best option? As the products with the lowest interest rates tend to have lender arrangement fees associated with them, by the time you factor in the additional costs involved this is not always the cheapest option.
A mortgage broker will look at the total cost of remortgaging, taking into account any lender arrangement fees, valuation fees, lender cash back and conveyancing costs involved, and be able to advise you of the best remortgage rates for your particular circumstances.
Selecting the wrong mortgage product or lender could ultimately end up costing you £1,000’s over the term of the mortgage, even on a relatively small mortgage balance, it is, therefore, important to ensure you are on the best remortgage deal.
Remortgage to lower your monthly payments
If you aren’t on a high interest rate and feel you could get a better rate, for example some adverse credit is now dropped off your credit report since you originally took on the mortgage, then this is definitely an opportunity to look around for a better deal. If you are tied into a current deal you will have some early repayment charges and potentially an exit fee which will need to be taken into account when looking at the figures.
Switching mortgages could still be the right move for your circumstances and result in an overall saving. Our mortgage experts will make sure that its financially the right thing to do.
Remortgage as your current deal is ending
Once your mortgage deal comes to an end, if you don’t do anything you will automatically go onto your lenders standard variable rate (SVR).
If you are currently on a fixed rate, it is best to start the process of remortgaging around 3 months before your fixed deal comes to an end. You want to ensure that the remortgage completes at the same time that your fixed rate comes to an end to ensure that not only do you avoid reverting to your current lenders standard variable rate (SVR), but you also do not complete while early repayment charges (ERC’s) are payable.
3 months allows plenty of time to ensure that everything is in place ready for your old rate finishing.
Can I remortgage for debt consolidation?
Remortgaging to consolidate debt can be more difficult for clients looking to approach high street lenders themselves. This is because many of these lenders will either have debt to income (DTI) caps in place, may not discount the debt being cleared for their ongoing affordability calculations (technically leaving the new loan “unaffordable”), and all have maximum loan to values for debt consolidation which vary from lender to lender.
If you are looking to remortgage your house to pay off debts, care needs to be taken when looking to secure previously unsecured debt against your property. While the short-term savings may look attractive, you could be massively overpaying in the medium-long term. A mortgage advisor will take all the above into account when making a recommendation.
If you are currently on a favorable interest rate with a high street lender, have had a credit blip or change in employment circumstances since the mortgage was originally taken out, a more preferential option may be to look at doing a product transfer with your existing lender and looking at any additional borrowing by means of a secured loan.
Maximum loan-to-value can vary lender to lender, with the maximum being 90%.
Can I remortgage my Help to Buy mortgage?
With the Help to Buy equity loan scheme having been in place for over 5 years now, we are finding that there are an influx of clients looking to find Help to Buy remortgage deals. There tends to be a mix in attitudes towards Help to Buy remortgages – clients are either looking to keep the equity loan in place or pay off the equity loan completely.
Most high street lenders will not look to remortgage to pay a share of the Help to Buy equity loan back, or to repay the equity loan unless the total borrowing does not exceed 90% of your properties current value.
There are however select lenders who will go to 95% loan-to-value for a Help to Buy remortgage.
Can I remortgage with bad credit?
Many clients have been previously placed with bad credit mortgage lenders due to bad or adverse credit either at the time of initially purchasing the property, or when undertaking a subsequent remortgage. The brokers we work with still see clients whose mortgages are with adverse credit lenders, even though their credit profile has massively improved.
Most financially savvy clients look to remortgage each time their current fixed deal is coming to an end and will speak to a mortgage advisor to compare other deals available to them from the whole of market versus the product transfer rates being offered by their current lender.
As all of the brokers we work with do not charge for their initial consultation, there are no cost involved when comparing the whole of market with the new deal being offered from your current lender.
Can I remortgage with my current lender?
Changing rates with your current lender is called a product transfer. Whether this option is available to you will depend on your current lender and the sort of mortgage deal you have. The main benefits are there will be minimal paperwork and no legal costs. Some specialist lenders don’t offer this service, so check with a mortgage expert who will be able to tell you if it’s possible.
If you are keeping the mortgage balance and term the same, your lender doesn’t need to perform any credit or affordability checks.
If you are looking to undertake a product transfer yourself, this would be classed as “execution only”, meaning that you would potentially not benefit from the level of protection that an advised sale provides. This means that if it was deemed at a later date that the mortgage product you selected is not right for you, you would have little to no grounds of making a complaint to the Financial Services Compensation Scheme (FSCS).
All of the advice the brokers offer is covered by the FSCS and FOS (Financial Ombudsman Service).
What is the maximum amount I can borrow?
This will depend on both lender affordability calculations (which take into account your income and expenditure, any financial dependents you may have, and the maximum mortgage term available to you), as well as the current amount of equity held within your property.
Typically, most lenders will go to 4.0–5.0x income, however there are products now emerging which go up to (and sometimes beyond) 6x income. This will very much depend on your individual circumstances and be on a case by case basis.
With regards to maximum loan-to-value, this tended to be between 80-90% depending on the lender, however there are now select lenders that will go to 95% loan-to-value for a remortgage.
Do I need a deposit for my remortgage?
No, the equity in your property will act as your deposit. You can put cash into the property if you wanted to lower the loan to value and get a better interest rate, with saving rates being so low (28th March 2020) this can be a sometime be a better option than leaving savings in the bank.
What documents will I need to remortgage?
Because you already own the property the documents needed by the lender will be as followed:
- Identification Passport or driving license – Ff you don’t have a photo ID there is a combination of documents that can also be accepted.
- Proof of address – Must be dated within the last 3 months
- Latest 3 months wage slips – If paid weekly latest 13 weeks
- Tax calculations & tax year overviews for self-employed income
- Latest P60 – If using bonus or commission income
The lender is within their rights to ask for additional documents upon submission.
When I remortgage will my property need a valuation?
In every remortgage case the lender will require a valuation. Some lenders will use an automatic desk top valuation – this means they check the information electronically and if they are happy with the data, they won’t send out a surveyor. If the information is unclear, they will either send a surveyor out (and will liaise with you directly to arrange access to your property) or conduct a drive-by valuation.
Can I remortgage and keep on interest-only?
Yes, however, this is more difficult than a repayment mortgage. The mortgage lender will need to ensure that you have provisions in place to repay the mortgage or enough equity in the property to be able to sell your property and still be able to purchase another. Properties in more expensive areas of the country are more likely to have an interest-only element.
Click here to read our article all about interest-only remortgages.
Can I get a bad credit remortgage?
Yes, it is possible to get a bad credit remortgage, however this will come down to the information on your credit report. If you are currently with a high street lender it may be a better option to do a product transfer and look to do a secured loan to raise any extra funds you may need.
For the most up to date advice and to discuss options for your remortgage call us on 0300 124 5565 or complete our quick inquiry form online.
Can I get a fee-free remortgage?
There are lenders who are offering fee-free remortgages. These have no valuation fees or lender arrangement fees, and also come with free legal services. The interest rates can be slightly higher, however as remortgaging is seen as less risky for any new lender and the products offered will be reflective of this.
A fee-free remortgage product may not be the best deal for you, so always speak to an advisor before you commit to anything.
Can I remortgage for a transfer of equity?
A transfer of equity involves removing or adding someone to the property resulting in a change of legal ownership. This can happen when a couple split up and one partner buys the other one out.
You will have to still prove that the property is affordable if transferring it into single names. The person being removed from the legal ownership will also need to have independent legal advice in some circumstances.
These types of remortgages can be more complicated and take a little more time, this is especially true if you need to use a specialist lender. If the remortgage comes with free legal be aware a transfer of equity fee will be a chargeable extra.
Can I remortgage my house I own outright?
Yes. This is known as having a property that is unencumbered. If you’re mortgage-free then the same options will be available to you, assuming you meet the affordability and other criteria.
Some lenders will differ in how they look at you, some will offer the same products as a new purchase and the same criteria will apply, and this will normally incur legal fees. Most lenders will class this as a remortgage and offer their mortgage products on this basis.
Speak to a mortgage expert
When you are looking to remortgage the experts we work with will be able to make sure you get the best unbiased advice for your circumstances.
All of our experts are whole of market brokers with the experience to ensure you receive the best customer service and the best mortgage deal possible.
To discuss your options call us on 0300 124 5565 or complete our quick inquiry form online.