What is Remortgage: How it Works, Time to Remortgage and it’s Process

Do you often ask what Remortgage is? Remortgaging is the process of finding a different lender for your mortgage while keeping the same property. This article will assist you in determining whether it’s suitable for your need.

What is a remortgage?

Remortgaging refers to the act of applying for a new mortgage with a different lender while continuing to reside in your current home. It should be noted that this definition of remortgaging does not include the concept of borrowing additional funds from your existing lender.

Is it Time to Remortgage?

If your current mortgage deal is nearing its end or has already transitioned to a follow-on rate, it’s important to explore the latest offers available. For instance, if the value of your property has increased since you purchased it, your loan-to-value ratio may have improved, opening up a wider range of options.

Remortgaging can also be a way to secure funds for home improvements or a special purchase. However, it is important to carefully consider whether you can afford the additional amount over the entire mortgage term. If you are considering consolidating other debts, remember that independent financial advice is accessible. It’s important to note that failure to make mortgage payments could put your home at risk.

Significant changes in your life, whether anticipated or unexpected, may mean that your current mortgage no longer meets your requirements. Whether you are starting a family or expecting a significant income change, remortgaging provides an opportunity to find a better-suited deal with us that caters to your current and future needs.

Get Ready to Remortgage

Once you apply for a remortgage, the process usually takes about 4 to 8 weeks to complete. During this time, you will typically need to have a conversation with a mortgage adviser from the new lender. These advisers are qualified to provide guidance on the best remortgage options that suit your specific needs. Before you get to this stage, think about the following 5 questions to help you get a clear idea of your situation and needs before applying.

5 Questions to ask for Clear Understanding Before Applying for Remortgage

1. What Will it Cost to Leave Your Current Mortgage?

Certain mortgages may have charges associated with them when you decide to leave under specific circumstances. These charges can include an exit fee or early repayment charge. It is important to note that these charges can amount to thousands of pounds if your current mortgage deal is still ongoing. To obtain accurate information about any potential charges, it is recommended to review the documents you received from your current lender or get in touch with them directly.

2. What do you Want From a new Mortgage?

Are you looking to reduce your monthly mortgage payments or have the freedom to pay off your mortgage more quickly? Are you considering a fixed rate option that ensures your payments remain unchanged for a specific period? It is important to consider your current needs as well as how your needs may evolve in the future.

3. Is Your Credit Score in Good Shape?

When you apply to transfer your mortgage to a new lender, they will assess your credit score by consulting credit reference agencies. It is important to verify the accuracy of the information on your credit score before applying. Even a minor error, such as a misspelling in your address history, could potentially create an issue.

4. How Much can you Borrow?

We recommend using our mortgage calculator to get an estimate of how much you could borrow and what your monthly payments might look like. It’s also essential to consider how fluctuations in interest rates could impact your finances. You can use our interest rate calculator to see how changes in interest rates would affect your mortgage payments.

5. Which Remortgage Deals are Available?

Once you have a clear understanding of your requirements and the amount you can borrow, it’s time to begin comparing different mortgage deals available to you.

How the Remortgage Process Works

When contemplating a remortgage for your home, it’s essential to consider your overall financial situation. Understanding the process of remortgaging is also important. Here are the steps you will need to take:

1. Complete an Agreement in Principle (AiP)

Many lenders now offer the option to obtain an online Agreement in Principle (AiP). This is a preliminary assessment that helps you determine whether a lender is willing to lend you the amount you require, without undergoing a full credit check.

It’s important to note that obtaining an AiP does not require you to commit to a specific remortgage deal, nor does it guarantee approval for a remortgage. However, it provides valuable insight into your options and helps you understand the possibilities available to you.

2. Consider all the Costs

To make sure remortgaging leaves you better off, check whether the lender you plan to move your mortgage to charges any of the following

  • Application fee – a charge to set up your new mortgage. Also known as an arrangement, product or booking fee
  • Valuation fee – to confirm the value of your property
  • Solicitor’s fee – a solicitor will need to manage the transfer of your mortgage

Ask any prospective lenders if you would need to pay an exit fee or early repayment fee if you want to remortgage again in the future.

3. Apply for Your new Mortgage

After obtaining an Agreement in Principle (AiP), you can proceed with applying for your remortgage. During the application process, you will be required to provide information regarding your personal and financial circumstances.

Additionally, you will need to furnish details about your existing mortgage. It’s important to have supporting documentation that verifies your income, such as pay slips or tax returns, as well as any paperwork pertaining to loans or other credit obligations you may have. These documents will help substantiate the information provided in your application.

4. Completing Your Remortgage

The final steps of a remortgage are similar to those involved in purchasing a new property. Your new lender will conduct a credit check to verify your current situation and arrange for a valuation of your property.

To facilitate the transfer of your mortgage, you will require the assistance of a solicitor or conveyancer. Some lenders may provide this service for free or offer recommendations for professionals to handle the legal aspects of the remortgage process.

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