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Remortgage Frequently Asked Questions

Steven Hargreaves goes back to basics with remortgaging

What is remortgaging? What are my options?

Remortgaging is where you have a specific deal, whether that’s a discounted mortgage, a tracker mortgage or a fixed rate mortgage, and the deal is coming to an end so you’re looking for another deal with another Lender.

We’re currently in January 2023 and if your current fixed rate ends on 31 January, you would normally revert back to the lender’s standard variable rate. Without getting too technical, that’s normally the highest interest rate that a lender will charge. 

We aim to avoid that standard variable rate like the plague, so instead you would choose a different product. There are different ways of doing that – we could approach your existing lender for a product transfer or product switch. An alternative to that is looking at a new lender, which is a remortgage. You’re ending your existing mortgage with Lender A and taking a new one with Lender B. 

Normally we look at what a lender would offer you to stay, i.e. the product transfer, and then see if there is a better rate available elsewhere. As a mortgage broker we look at your income, expenditure and existing mortgage to explore whether a product transfer or remortgage is the better option.

When is it a good time to remortgage?

Ideally you want to look at your remortgage as soon as possible. I have quite a large bank of existing clients and I contact them six months prior to their deal coming to an end. That way I can manage their expectations and give them an idea of whether their payments will go up or come down. 

Last year we were arranging a lot of remortgages six months before the client’s rate was coming to an end, because interest rates were rising. It was more beneficial to secure a rate early. 

You may want to borrow more money to extend or renovate your house. If you start looking six months ahead, you can get builders round for quotes and estimates and have architect plans drawn up. You then know well in advance of your remortgage how much extra you need to borrow. 

Or, you may be in a situation where your 0% credit card offer is coming to an end and you want to clear that debt. We will look at your circumstances and work out how much you need to borrow. Again, it’s a good idea to start looking about six months before your deal comes to an end.

When is remortgaging not a good idea?

Today! I know that’s a bit of an odd answer. But I’m contacting some of my clients at the moment – in September-October 2022 interest rates went up a lot, yet in the last few weeks interest rates have started to come down quite nicely.

So I don’t want to arrange a remortgage today for a client – I’m actually leaving it as late as possible while interest rates are dropping. Perversely, that’s the opposite of last year where we remortgaged as quickly as possible. We’re in January 2023 and if you listen to this in a year or two years’ time, it could be completely different again. 

Speak to an independent mortgage advisor at least six months before your deal comes to an end so you can manage the journey and your expectations. Your broker will talk you through every step. It isn’t a case of a good time vs a bad time – we will help you secure a rate at the right moment.

It’s an opportunity to explain what you want to do whether that’s moving house soon, or increasing your borrowing. I’ve just had a client who paid quite a large amount of their mortgage off. Their deal was due to end on 30 November. If they’d paid the mortgage off on November 29 they would have faced a big early repayment charge. But because we knew about this well in advance I explained that they should wait until 1 December to pay the chunk off, so that there would be no penalty.

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Why should I remortgage at the end of a fixed rate deal, and what happens if I don’t?

You tend to find that there’s an early repayment charge on your mortgage. If your deal is fixed until 31 January and you remortgaged on 12 January you would incur a charge. 

We would make sure the remortgage went through on 1 February so you wouldn’t incur any penalties. 

How do I improve my chances of getting a good remortgage?

People come to me with many different circumstances. A client I saw yesterday is due to remortgage in a few months. Unfortunately they’ve had some issues with credit after missing payments on a number of different loans. It’s actually through no fault of their own, but that doesn’t help us. 

I don’t have the ability to remortgage to a new lender, instead what we discussed yesterday was switching the product to a new rate with the same lender because there will be no credit check or income check. 

So again, it’s a case of getting in early and making sure you know exactly what you want from your remortgage and talking it through with a good mortgage broker.

What fees are associated with a remortgage?

The good thing about remortgaging is that a lot of lenders will offer free valuation and free solicitor fees. Solicitors can cost anything between £600 and £2,000, but many lenders offer an in-house remortgage package which is free. 

So the cost of remortgaging is actually very little, as long as you avoid any early repayment charges. There are no other legal fees and you can often do it for nothing.

Any final thoughts on remortgaging?

Just remember to check with your mortgage broker six months before your deal is due to end. Explain what you’re wanting to get out of that remortgage, what you’re hoping to achieve and ask what’s available. Your broker will talk you through the best way of doing it. 

Do that sooner rather than later. Don’t leave it until two or three weeks beforehand because that won’t give you time to look at all the options.

Think carefully before securing other debts against your home. 

You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up with your mortgage repayments. 

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