Remortgaging allows you to take out a new mortgage on your current property to replace your existing one, and could save you hundreds of pounds a month.
While it’s often a great way to cut your costs, it’s not always so straightforward, and there are a couple of things that you should bear in mind before doing so.
It can be a long process
Remortgaging can take time to sort out, but if it’s going to save you hundreds or thousands of pounds in the long term, we absolutely think it’s worth sticking with.
All in all, the process will probably take somewhere between four and eight weeks to complete.
Obviously, this will be quicker if you stick with your current lender but we recommend playing the field and checking out as many lenders and products as possible to get the best deal.
Speak to your current lender to see if they can do you a good deal, but in most cases we would recommend coming to a mortgage broker such as ourselves.
While this may mean your remortgage may take a bit longer, it could turn out to be a much cheaper method in the long-term.
Beware extra sales
As with any mortgage, your lender will probably try and take this opportunity to make some extra sales to you.
One of these will be buildings insurance. You may well be thinking that you already have buildings insurance and won’t be needing it, but if your insurance was with your old mortgage provider then you might find that it gets cancelled.
But while you may wind up needing a new policy, don’t feel that you have to take it from your new lender, as there is likely a better deal out there somewhere.
You may also be offered mortgage PPI (payment protection insurance). This covers you if you cannot make your payments if for any reason you cannot work or fall ill.
Like with the insurance, if you do feel that you might need this, don’t necessarily take it from your new lender and shop around.
It can be a bit more time-consuming
Remortgaging can often seem a little bit more complicated than sorting out a normal mortgage.
This isn’t necessarily the case although you might find that you will have to spend a little bit more time on the phone and in various meetings than you normally would.
This is because you’re going to be dealing with both your old lender and your new one, but remember the money you’ll be saving when it’s all over!
There are a couple of steps you can take to try and make things a little bit smoother such as checking your credit score with a free site such as ClearScore and taking little steps to improve it such as getting on the electoral roll and paying off any debts.
You’ll need lots of paperwork
Just like with your current mortgage, you’re going to need lots of various pieces of paperwork to complete the remortgage.
This means the likes of bank statements, pay slips, tax forms, proof of address and some form of ID such as a passport, although the specifics will vary from lender to lender.
This will probably be needed in physical, paper form, as opposed to electronically so make sure you take the time to get everything together early on to speed up the process further down the line.
Some of the fees which applied when you took out your initial mortgage will also apply when remortgaging.
For example, these may include:
These can vary quite a bit depending on the value of the property that you’re remortgaging as they can sometimes be calculated as a percentage of the amount being borrowed.
These fees can sometimes be added to your mortgage but we wouldn’t recommend doing so as it will just add to the cost of switching.
If switching lenders, you’ll probably require the services of a solicitor. These costs can be cut if you use the same firm who handled your initial mortgage as they may have kept all of your details on file from your first application.
Your new lender will need to carry out surveys to assess the value of the property and these can cost a couple of hundred pounds.
Your existing mortgage provider might well charge an exit fee when you leave so make sure you check this and weigh up whether it’s worth paying.