You may be able to save hundreds of pounds just by switching your mortgage to a better deal or a new provider at the right time.
Most people think about remortgaging at some point and rightly so. Whether interest rates have changed, your home has risen in value, or you have undergone a change in circumstances, there could be a better mortgage option out there for you.
Why remortgage your home?
People remortgage their homes for all sorts of reasons, including:
- To get a better deal
- To fund an extension or home improvements
- To release equity for your retirement
- To get a mortgage which better suits your personal circumstances, such as a longer term or flexibility with payments
- To switch from an interest only to repayment mortgage or vice versa
When should you remortgage?
You can remortgage at any time but you should always seek expert financial advice about whether remortgaging at this time is right for you. Good times to remortgage include:
When interests rates are low
A fixed rate mortgage deal can lock you into a low rate for a specific period of time (usually 2, 3, or 5 years). This means you can be sure your monthly payment will not change until the deal ends, potentially saving you money in the long run if interest rates later go up.
When your fixed mortgage term is coming to an end
Once your deal ends, you will automatically move to your lender’s Standard Variable Rate which is likely to be higher than your current payments. You should start thinking about remortgaging to a new deal around 3- 6 months before your deal ends to ensure the process can be completed in time.
However, be careful because some lenders charge substantial admin fees to process a remortgage. When researching new mortgage deals, make sure that you are not spending more to switch than you will save on the new deal.
Similarly, you generally should not try to remortgage before your fixed rate deal has ended or without carefully checking the repayment terms of your mortgage. Otherwise, you will likely incur an early repayment charge which could cancel out any benefit you obtain from switching deals.
When your home has significantly risen in value
The proportion of your home that you own outright is called equity. The ratio of the equity you own to the proportion of your home that is mortgaged is called the Loan to Value Ratio (LTV). As you pay off the mortgage and the value of your home increases, your LTV will naturally decrease.
The lower your LTV, the better mortgage deals you will have access to. If your home has significantly increased in value, it may be worth remortgaging to access these better rates and get a cheaper deal.
However, it is often not worth remortgaging if the outstanding mortgage is relatively low (for example, below £50,000). This is because the cost of switching may be higher than the benefit you will obtain.
Get expert advice about remortgaging your home
At Bird & Co, we are conveyancing experts with years of experience advising clients on remortgages and handling the process on their behalf.
Choosing the right time to remortgage is essential to maximise your savings and prevent you from running into issues such as early repayment charges or rate changes. It is essential that you speak to an Independnt Financial Advisor to ensure that you get the best deal for you.
When you decide to remortgage our highly skilled remortgage solicitors can liaise with your lender on your behalf, complete all relevant paperwork swiftly and accurately, and ensure the new mortgage is registered correctly at the Land Registry.