Are you a homeowner considering remortgaging but feeling overwhelmed by the cost and process? Look no further – here we aim to demystify the world of remortgaging and provide you with the knowledge and confidence you need to make informed decisions. Whether you're looking to reduce your monthly repayments, release some equity, or simply switch to a better deal, understanding the costs involved and what it entails is crucial.
By the end of our latest article, you will hopefully have a clear understanding of the likely expenses associated with remortgaging and feel confident in making informed decisions about your mortgage options as a homeowner.
Should I stick or move to a new lender?
Whether you're renegotiating with your current lender or switching to a new one, the fees involved are not a major concern. While there might be a "closing/account fee" payable to your current lender (so if you change lenders), this is often outweighed by the benefits of securing a better deal. That's why it's crucial to explore your options and find the best deal that suits your situation.
What mortgage fees can I expect to pay?
Regardless of whether you are staying with your current lender or switching to a new one, you'll typically be presented with two options for the same deal. Let's say you've decided that a two-year fixed rate is best for you right now, you'll have two choices:
1) A lower rate but with an Arrangement Fee, typically around £995
2) A higher rate but with no Arrangement Fee
Which option is better for you will simply be down to the size & term of your mortgage – so for those with a smaller mortgage you are most likely to benefit from option 2 as you are unlikely to recoup the arrangement fee despite paying a lower interest rate.
However, if you have a mortgage upwards of, for example, £250,000, you may well find that option 1 is more cost effective despite paying the arrangement fee.
If you are taking a new deal with your current lender, there are unlikely to be any further costs for you to pay. Equally, most other lenders are actively looking to secure your business so will also be offering their deals with no further mortgage fees to pay.
How Much Does It Cost to Remortgage to a new lender?
You may be surprised to hear that moving to a new lender is unlikely to result in any additional costs. This will of course always depend on your own situation and the lenders being considered – as mentioned previously, some lenders will from time to time offer a competitive interest rate but there may be additional fees attached to this. It is therefore vital to consider the bigger picture, particularly if you have a sizeable mortgage.
You may incur a mortgage broker fee - check out our Fees Page for a complete rundown on broker fees and what to expect.
Will I need a solicitor?
When you remortgage to a new lender, a solicitor or conveyancer will handle the necessary paperwork. Don't worry, most lenders will either provide their own legal team for free or offer a cashback option to cover these costs. However, there may be other fees depending on your situation / your property, such as additional legal costs for leasehold properties or if you are adding (or removing) someone to your mortgage.
Will my current lender offer me a better deal?
Don't assume your loyalty will be rewarded. While you may be presented with a competitive offer, the process is often all too quick and easy, leading to potential decisions without fully considering your future plans. If you're thinking of moving or anticipate needing additional funds later, it's important to weigh your options carefully.
Jumping into a new deal without proper consideration could end up costing you more in the long run. That's why consulting with a knowledgeable mortgage broker is a wise move. They will not only show you what your current lender can offer, but also explore the market for potentially better alternatives.
When should I start looking at my options?
Did you know that you can book a new mortgage deal up to six months before your current one ends? But be careful not to jump into a deal with your current lender without considering other options. If you lock in a new rate months in advance and the rates later drop, your lender might not tell you. That's why it's smart to work with a mortgage broker who will keep an eye on interest rates and help you secure the best deal available.
Check out When Should I Look At My Remortgage for more details on this and the general remortgage process.
Can I borrow additional funds?
Sure, subject to status lenders allow you to raise funds for most purposes, the most common of which are to:
Help fund some Home Improvements or maybe towards a large family holiday.
Clear some unwanted debts, loans / credit cards etc.
Purchase another property to let or a holiday home.
Help a family member with a deposit towards their first home.
If you are continuing with your current lender the process of raising additional funds is referred to as a ‘Further Advance’. Remember, this will result in having two parts to your mortgage. Note: if you are taking a further advance mid-term, so perhaps you are halfway through a fixed rate, you should give some consideration to when your new additional loan will end – it is advisable to try to connect both so that they end around the same time.
Do I need an up-to-date valuation of my home?
While you don't necessarily need written proof, it is essential to have a reasonable estimate of your home's value. This will help determine the mortgage options available to you. When switching to a new lender, they will conduct their own checks. Nowadays, most lenders rely on online data / statistics for a current valuation, which usually works well. However, if you have made improvements to your home since purchasing it, these enhancements may not be reflected in the lender's valuation. It's important to inform your mortgage broker about this, as it could significantly impact the availability of suitable mortgage products for you.
For further details on this check out When Remortgaging Who Values My House.
How long does it take to re-mortgage?
Whilst the mortgage process will vary from lender to lender and can therefore be quicker or slower depending on who you use, you should ideally allow for a minimum of 6-8 weeks to re-mortgage your home. As well as securing a new mortgage offer you will also need to collaborate with a solicitor who will organise the transfer from one lender to the next.
My mortgage renews in the next six months, what should I do next?
For complete guidance and support it goes without saying that you should connect with a mortgage broker. They will very quickly determine your best route forward and help map out your next steps towards securing the best deal for your situation.
So, if you're feeling overwhelmed by the thought of remortgaging your home due to the recent interest rate hike, don't panic. The process can be simple and cost-effective if done correctly. Remember to consider your future plans and seek advice from a knowledgeable mortgage broker before making any hasty decisions. They can not only show you the deals your current lender may offer, but also explore the market for potentially better options.
Take action now and reach out to us for further guidance on how we can help make your remortgaging journey a smooth and stress-free one. Don't let fear or uncertainty hold you back from securing a better deal. Let's work together to find you the best solution - contact a member of our team today!!
Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Published by Beechwood Mortgages Ref: 219335 with review and approval from Stonebridge Mortgage Solutions Limited who is authorised and regulated by the Financial Conduct Authority Ref: 454811.