Remortgaging Myths – What you need to know
Understanding the remortgaging process can be a challenging prospect, especially if you are a first-time buyer with a fixed-term deal that is coming to an end, or have experienced a change in circumstances. This guide is designed to dispel some of the most common misconceptions around remortgaging and help homeowners find the best possible deal.
You can remortgage at any time, depending on your circumstances. It’s not uncommon for example, for customers to remortgage their home and borrow more money for home improvements.
However, one of the most common and pressing reasons to remortgage is to secure a new fixed-rate deal. Securing a fixed rate on your mortgage payments can help give you certainty when budgeting for monthly outgoings and save you hundreds of pounds a year – sometimes even thousands.
If your fixed-term deal is set to end soon, it may be time to speak to a mortgage broker to help you secure the best deal.
A mortgage broker can help you compare hundreds of mortgage services and navigate the many misconceptions around remortgaging, such as…
Myth: Remortgaging is expensive
Yes, there are fees associated with remortgaging, but these will vary depending on the lender and product you choose. Some lenders, for example, will cover expenses like having your property valued and legal fees, which can help to keep the cost of remortgaging down.
Ultimately, the goal of remortgaging is to save money and you should find that even accounting for any fees you need to pay, your monthly payments (and the overall cost of your mortgage) should fall. This is especially true if you are currently paying a standard variable rate (SVR), which is typically much higher than other mortgage products.
The only time you should expect to see your monthly repayments increasing after remortgaging your property is if you have increased the amount that you are borrowing.
The key is to compare what you are paying on your current deal with what you will be paying on a new arrangement, along with any fees you will be required to pay. Your new rate plus any fees should amount to less over time than you would have paid by allowing yourself to move on to your lenders standard variable rate
Myth: You can only remortgage once your current deal has ended
You can remortgage at any time, but you’ll need to watch out for early repayment charges. If switching to a new lender means paying a high early repayment charge, you’ll need to shop around for a deal that makes the remortgaging process financially worthwhile.
If you are currently on a fixed-rate, discounted or tracker mortgage that is due to end soon, you can often save money by securing a new mortgage deal before you transition onto your lender’s SVR. As variable rates are typically less competitive than other products, switching to a new deal around three months before your existing deal ends is often the cheapest option.
Myth: You can’t remortgage because your financial circumstances have changed
There are all sorts of things that can change in your circumstances that affect your income. You may have changed your job, become self-employed, or even decided to take on several jobs. Personal matters like a change in relationship can also have a significant bearing on your finances, so it’s important to take the time to see what your options are before you write off the idea of getting a new mortgage.
If you are earning less than you were when you first took out your mortgage, you may find that you are unable to borrow more. However, it may be possible to remortgage your property based on a lower amount with lower interest, so that you walk away with a better deal.
If you have lost your job, now is likely not the time to remortgage. If you are struggling to meet your mortgage repayments, you should always speak to your current lender.
Myth: If you’re self-employed, you have to wait three years or more before you can apply for a mortgage
While there are some complications that arise from being self-employed, it is still possible for you to be considered for a mortgage. You may need to approach specialist lenders, which is often easier through a mortgage broker, so reaching out to someone sooner rather than later could be your best option.
At Edward Meller, we can reach out to more than 50 mortgage providers, including specialist lenders to find the right deal for you. If you are self-employed and looking for a better mortgage deal, contact us and we’ll scour the market for you!
Conclusion: Knowledge is power when remortgaging
Whether you are looking for your first mortgage or remortgaging for a better deal, the old adage of ‘ forewarned is forearmed’ should be on your mind when comparing mortgage products.
Even if you are prepared to explore the market yourself and approach lenders directly, it makes sense to speak to a mortgage broker to make sure that you have considered every available option. Some lenders will have special offers that are only available to customers directly, while oftentimes the reverse is also true. Brokers often have special rates that aren’t available elsewhere, so if you want to make sure you find the best mortgage deal, it’s best to consult a broker to make sure that you leave no stone unturned.
For the best friendly, expert advice contact us today or give us a call on 0161 443 4830.
We’ll take care of the whole remortgaging process and make sure you find the best possible deal.
Your home may be repossessed if you do not keep up repayments on your mortgage.