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Gary Boakes shares his expertise on Remortgage.
Gary Boakes gives us a recap on remortgaging.
What is remortgaging and what are my options?
A remortgage is basically taking your debt from one lender and passing it to a new one. Say your current mortgage is with Halifax and you feel there is a better deal available with Santander, you move your debt across.
You can also opt for a ‘product transfer’ which is keeping your debt with the same lender. For example, Halifax might offer you a deal as an existing customer, based on your circumstances and you just transfer to a new rate. Those are the two major options when your current deal has come to an end.
When is it a good time to remortgage?
The time to think about remortgaging is actually a lot earlier than people think. We would recommend exploring things around seven months before your product ends. Then we can really look at your options and have enough time to put things in place for you.
Most lenders provide six-month mortgage offers on a remortgage or a product transfer, so we can have a rate ready for you six months before your current deal ends. The longer we have to deal with each customer, the better outcome and the better deal we gain at the end.
With remortgages it’s usually about wanting to get the best possible deal. We’ll look at what your current lender has to offer against others in the marketplace. But there are other reasons why people will want to remortgage – maybe they want to make home improvements, taking money out of their property to build an extension or put in a new kitchen.
Another reason to remortgage is for debt consolidation, which is potentially going to be a big factor this year. We would look at your debts and explore how to work those into your mortgage to lower your monthly costs overall.
There are lots of different reasons to remortgage. You can borrow for almost anything as long as the lender allows you to. You might borrow money for a car or help a child with a deposit for a home. Lenders set criteria for borrowing extra money and we can help you negotiate it all. We could change the term – the number of years your mortgage will last.
What happens if things have changed since I took out my last mortgage deal?
When you remortgage, we look at your situation again and base the mortgage on your new set of circumstances. Your life is not going to be the same as it was when you first took that mortgage out two, three or five years ago, so this is an opportunity to fine tune that mortgage to suit your situation going forward.
The biggest thing people are worrying about at the moment is that interest rates have gone up. So in the majority of instances the new rate is going to be higher than your current one.
But again the longer we have to prepare, the longer you will know what your payments will go up to – and be prepared for it.
If you have got six months to prepare for a £200 increase to your payment, it’s easier to get used to than it is in a month. Part of what we do is to continue to revisit the rates. Over the last or six months or so we have been revisiting people’s remortgage products and moving to cheaper ones as and when they become available. Again, it’s very hard to do that if you leave it till the last month.
How we can help you
No matter what stage in life you’re at, our expertise will help guide you along the way. We’ll take the time to understand you, your aspirations in life and what you want to achieve in the short, medium and long term. Our team of experts are on hand to help people all over Wiltshire and the surrounding areas, from our Salisbury office.
We want to give you peace of mind, knowing that no matter what happens, you’ll enjoy a financially secure future.
When is remortgaging not a good idea?
Most of the time you remortgage when you’re coming to the end of your deal. But some people need to remortgage for other reasons, while still in the fixed term of their mortgage. In this case we need to see whether there is an early redemption charge and if it’s worth doing.
If interest rates drop again, it may well be that people want to remortgage out of their current deal to a cheaper rate. Again, we would look at whether or not the early redemption charge is too large to do that, based on the savings that you’re going to make.
Remortgaging may not be a good idea when someone’s circumstances have changed. Maybe their house price has gone down, so they’re no longer meeting a 90% Loan to Value ratio. Maybe there are credit issues or they have had children. If you’ve just lost your job, remortgaging may be more difficult.
But this is the advantage of product transfers – you may not get the best deal on the market, but it means you’ll get a better deal than the standard variable rate. Our role as a broker is just making sure that it’s financially viable for you to do it.
Why remortgage at the end of a fixed rate deal? What happens if I don’t?
Once your current fixed rate deal ends you will go onto what we call the standard variable rate. This rate is almost always considerably more than what you’re currently on at the moment and what you can get as a new deal – so it is going to be more expensive.
There are some reasons why you may want to stay on the standard variable rate but we would discuss in our meetings whether that’s the right course of action. If your deal’s coming to an end but you’re buying a new property, it may be that we need to roll onto that standard rate for a month or two.
But in most instances we don’t want people to pay more than they have to. We want to get them on a new deal as soon as their current one ends. That keeps mortgage payments as low as possible.
How do I improve my chances of getting a good remortgage?
It’s a good idea to be prepared. Like you did to get the mortgage initially, you need to maintain a good credit score by ensuring you’re making all your payments on time.
If you’re remortgaging you’re taking your debt to a new lender, so you need to have the income and expenditure to do that. Remortgaging is no different from when you first took out your mortgage, to a certain degree. You still need to have good credit and the right levels of income and expenditure.
What fees are associated with a remortgage?
It’s essentially any mortgage related costs, arrangement fees and valuation fees. Generally you have two options when it comes to remortgages. One is what we call a free legals option where the lender provides you with a solicitor to do the transaction for you. The legal work is free unless there’s anything unexpected or any extra work that needs to be done such as a transfer of equity – that would be an additional cost.
The other option is to choose your own solicitor, in which case there will be a cost involved – but often the lenders will offer a cashback service of £250 to £500 to potentially mitigate some of those costs.
These are the only costs you’ll come across: any fees associated with the actual product and then solicitors’ costs.
How can a mortgage broker help if I need to remortgage?
It’s all about our ability to look at your individual set of circumstances and explore a wide range of options to suit your goals. We’ll see what the whole market has to offer and pick the right lender for your situation.
We’re here to ensure you have the most suitable mortgage product available to you, to suit your circumstances for the next two, three or five years – whatever you choose to do.
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.
Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited 31/3/23