What is Remortgaging?
A remortgage is when you apply for a new mortgage, while remaining in the same home. The new mortgage will typically be with a new lender and the property will again be used as security by whichever bank or building society you choose.
This means that like your original mortgage, your home may be repossessed if you are unable to keep up with your monthly mortgage repayments.
Remortgaging your property can be a way of increasing how much you are borrowing to unlock funds for home improvements or a special purchase, however the most common reason to remortgage is when you are approaching the end of a fixed-term arrangement.
When an existing mortgage deal comes to an end homeowners will find themselves on their lender’s standard variable rate (SRV), unless they have arranged for a new deal.
Variable rates are set by individual lenders and are typically higher than competing mortgage products, so it is usually beneficial to arrange a new mortgage deal to keep your monthly repayments affordable.
How does Remortgaging Work?
Remortgaging is an important decision, so you’ll need to think carefully about whether you are financially ready to commit to a new arrangement. This is especially true if you are thinking about increasing the amount you are borrowing. Our mortgage calculators can help you decide how much you can afford to borrow and how much your monthly repayments might be.
Once you are ready to proceed, there are a few steps to undertake to complete the remortgaging process.
Getting an Agreement in Principle
Getting an agreement in principle (AIP) is a good way to get a genuine understanding of how much you could be able to borrow. An AIP is an agreement between a borrower and a lender that can be seen as a stepping stone toward a contract.
An agreement in principle can be secured without a credit check and will show lenders that you are serious about the remortgaging process. Most lenders will allow you to apply for an AIP online, so taking this first step can be a relatively simple process.
Consider the Cost of Remortgaging
While an agreement in principle can give you an idea of how much you could borrow, you’ll also need to consider the costs involved in remortgaging to make sure that it is the right financial decision.
To make sure that your new mortgage deal will leave you better off, you should consider the following potential fees:
- Application fees – This charge is applied by lenders for setting up your new product.
- Valuation fees – This is charged when your property is valued as part of the remortgaging process
- Solicitor’s/legal fees – These will be charged by the solicitor who manages your remortgage.
- Exit/Early payment fees – Some mortgage products will charge a fee if you end your arrangement with them.
Some lenders will cover the legal costs and/or valuation fees associated with remortgaging your property if you take out a new mortgage with them. To make sure that you get the best possible deal, be sure to check the terms of any arrangement before you commit to a new deal.
Apply for Your Remortgage
Once you have found a suitable mortgage and obtained an agreement in principle, you’ll need to apply to the new lender. The remortgaging process is very similar to the mortgage application process, so you’ll need to make sure that you have the same documentation to hand that you used when you applied for your original deal. These will include your identification, proof of address and proof of earnings.
Completing your Remortgage
After you have applied for your remortgage, your bank will carry out a credit check on your finances. They will also arrange for your property to be valued. At this stage your solicitor will be responsible for managing the transfer of your remortgage.
Speak to a Mortgage Broker
If you’re ready to arrange your remortgage or would like more advice before you proceed, the team at Edward Mellor is waiting to hear from you.
We pride ourselves on our friendly and proactive approach to securing the best deal on your mortgage. To begin your remortgage process, please don’t hesitate to contact us or give us a call at 0161 4434 830.
Your home may be repossessed if you do not keep up repayments on your mortgage.