Top Reasons to Remortgage Your Home and the Process

Written on 5 December 2023 by Nicholas Mendes

A mortgage is a long term commitment, which means you’ll want to make sure it continues to fit your needs as they change over time. Your circumstances aren’t static, so it makes sense your mortgage requirements won’t be either.

The most opportune time to remortgage onto a new deal that better fits your needs is when your introductory rate is due to end. Remortgaging at this point will help you avoid going onto your lender’s more expensive SVR (standard variable rate) and avoid any ERCs (early repayment charges).

In this blog I’ll discuss the benefits to remortgaging in more detail, the process involved, how an independent mortgage broker like John Charcol can help you and more.

Benefits of Remortgaging

Let’s start with the benefits of remortgaging:

Lower Interest Rates

One of the key motivations for remortgaging is to secure a lower interest rate than what your current mortgage lender is offering you via a product transfer. While we have seen an increase in people opting for product transfers, there are over 120 lenders in the market so you’ll want to ensure you’re going after the best deal. A reduced rate can lower your monthly payments and result in significant savings over the life of your mortgage, particularly if you regularly review your deal to avoid your lender’s SVR. Remortgaging can be a useful way to potentially secure a lower rate if your credit has vastly improved since you took out your original mortgage.

Access to Equity

As your property's value increases, remortgaging allows you to tap into your home's equity for various purposes - such as home improvements, debt consolidation, or funding major life events. You may find your existing lender’s affordability appetite has changed, so while they may decline a further advance, you could remortgage with a new lender to release equity.

Flexible Repayment Terms

Remortgaging enables you to adjust the terms of your mortgage to better suit your financial situation, whether it's extending the term for lower monthly payments or shortening it to pay off your mortgage faster. You can also opt for a new product that allows overpayment facilities should you be expecting to want to pay off large chunks of your mortgage in the near future. I would always recommend speaking with a whole of market mortgage broker like John Charcol who can discuss these options with you.

Debt Consolidation

If you have high interest debt, like credit card bills or personal loans, consolidating them into your mortgage can help make them more manageable and affordable as you could benefit from a lower mortgage interest rate. Bear in mind that with debt consolidation, you can end up paying more in interest overall depending on the debt and your mortgage term. Nonetheless, debt consolidation can still be a helpful way to get on top of your finances. As a broker we will review if this is suitable for you and what options are available.

Additional Facilities and Setups

Life is full of surprises and your financial situation can change. Remortgaging can help you adapt to these changes by giving you access to flexible mortgage facilities and setups, such as overpayment options, offset savings accounts, HELOC (Home Equity Line of Credit) schemes, etc.

Steps in the Remortgage Process

Discussing your financial situation or trying to navigate your options for the first time can be daunting, especially if you’re unsure of the steps. Here at John Charcol, we handle everything and can guide you through each part of the process below:

Assess your current mortgage - review your current mortgage deal, including the interest rate, remaining balance, mortgage term, early repayment charges and more
Set financial goals - determine what you want to achieve through remortgaging, whether it's lowering monthly payments, releasing equity, consolidating debt, paying off your mortgage quicker, or something else
Shop around - research different lenders and mortgage deals to find the best offer. Comparing rates, terms and fees is crucial. Speaking to a whole of market mortgage broker like John Charcol can make this part of the process much simpler and more straightforward. We have access to a wide range of mortgage deals, are familiar with lender criteria and facilities and can provide expert advice tailored to your situation. If you want to try comparing remortgage deals yourself that’s fine, but I would always recommend speaking with a broker to double-check you’re going after the best option for your situation, as some deals are only available through an intermediary
Apply for the new mortgage - once you've chosen a suitable mortgage deal, we’ll take the hassle out of the application process by submitting your application for you and liaising with the lender
Valuation and underwriting to mortgage offer - the lender will carry out a valuation of your property which may be a desktop valuation where the surveyor likely won’t physically visit the property. The lender will also underwrite your application where they check all the information and documents you’ve provided in your application. Assuming the lender is happy following the underwriting and valuation, they’ll send you a mortgage offer
Conveyancing – the solicitors handle the legal aspects of the remortgage to allow you to transfer from one lender to another
Completion – this is where your new mortgage is in place and your old one is paid off

Benefits of Speaking to a Broker

Mortgage brokers are invaluable in the remortgage process. Here are some example of the benefits of using a broker:

Expertise - brokers are knowledgeable about the mortgage market and can find you the most suitable deals. They also have a deep understanding of lenders criteria, so if your income or circumstances are more complex you’ll find it especially helpful to consult a mortgage broker. If a lender has declined your application, don’t be disappointed as one lender’s opinion doesn’t reflect the market. A mortgage broker will be able to assess your situation and look into finding you a more suitable lender with criteria that aligns with your situation
Savings - brokers can often secure better rates and terms than you could on your own, resulting in potential savings. Some lenders only deal or offer bespoke products through an intermediary only. This is nothing untoward, but some lenders prefer a broker take on the advice process rather than dealing directly with a customer
Time savings - brokers streamline the process. It’s literally their job to sort your mortgage which means they can save you a great deal of time and effort in researching and comparing lenders, as well as getting your application together and liaising with the lender
Access to exclusive deals - brokers often have access to exclusive mortgage deals not available directly to consumers

Get in touch with us today on 0330 433 2927 to see how we can help you remortgage.

When to Start Looking for a New Deal

It's essential to monitor your current mortgage and keep an eye on the market. Start considering a remortgage when:

Your current deal is ending, typically 6 months prior to the end of your fixed rate or initial products period
Your financial situation changes and you need to adjust the terms of your mortgage
You want to release equity or consolidate debt

Avoiding the Lender's Standard Variable Rate

When your initial mortgage deal ends, you may be transferred to your lender's SVR (standard variable rate), which tends to be higher. Remortgaging is an excellent way to avoid this and secure a better deal.

What to Consider When Remortgaging

Fees and costs - be aware of any fees associated with your new mortgage, including arrangement fees, broker fees, valuation fees and legal costs
Credit score - ensure your credit score is in good shape, as it can significantly impact the deals available to you
Long term goals - consider how your mortgage fits into your long term financial goals, such as retirement planning
Equity release - if you plan to release equity, think about how you intend to use the funds wisely

Advice for Those Waiting to See What Happens in the Mortgage Market

The mortgage market can be unpredictable, but waiting for the right moment to secure a deal is not a viable strategy. Lenders frequently adjust and reprice their products based on market conditions, and you don’t want to lose out on a deal as you feel something better will come along. A mortgage broker continually monitors the market so rest assured your adviser will get you the best deal available to you at the time, including if a better deal comes up before completion.

Remember that remortgaging at the right time can save you money, enhance your financial stability, and allow you to access the equity in your home.

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