Remortgaging: Top 10 Tips

 

 

 

Advice for Remortgaging in the UK

  1. Remortgaging is Time Well Spent

Many people assume Remortgaging will take a long time. However, the process can be relatively straightforward. Most banks are eager to gain your custom and so will try and do most of the work for you. The whole process may take 4-5 weeks, however, this is mostly waiting for the bank to make the adjustments. It will take up little of your time.

  1. Check out Existing Mortgage Dealer First

The easiest and painless way to remortgage is to contact your existing mortgage dealer first. As soon as you revert from an introductory rate to the standard variable rate, ask them about their best remortgage deal. The advantage of Remortgaging with your existing mortgage dealer is that:
Lower costs
Pre qualified – no income checks required and therefore less paperwork.
Easier to make the transition.
Saves time researching other mortgage deals.

  1. Don’t throw money away.

Would you be willing to pay an extra £146 a month for an expensive gas supplier?
If your council tax was £246 a month, but you had the option of spending 1 hour to reduce it to £100 would you do it?

Remortgaging can potentially save £100s. For example, if you have a £150,000 mortgage at a SVR of 7% you would be paying £874 a month. If you remortgaged to a fixed rate or tracker mortgage of 5%, your monthly payments would fall to £728 a month. This is a saving of £146 a month.

  1. Costs of Remortgaging

Remortgaging can incur various costs. These include, exit fees, joining fees and costs of paying a mortgage dealer. However, it is possible to find mortgage advisers who do not charge money for offering advice. Instead they get paid from the commission of the remortgage.

  1. Low Fees vs Low Rates?

Some remortgage deals offer zero fees for making the transition. However, this will inevitably mean a higher interest rate on the mortgage deal. (they give with one hand, but take away with another) If you have a relatively small amount to remortgage, it is best to choose a deal with a low fee. If you have a large amount to remortgage it is more important to get the best interest rate; the fee will be a smaller % of the total mortgage

  1. Remortgage for Debt Consolidation?

If you debts on high interest bearing credit cards or loans, it is advisable to remortgage and take equity withdrawal from the value of the house. This means if your current mortgage is for £150,000 you can remortgage for £160,000. Therefore, you will then have £10,000 to spend on paying off debts or buying a new car. It is better to have loans in the lowest interest paying debt. However, remember that your mortgage is secured against the value of your house. If you default your home can be repossessed. Over time you will also pay more interest.

  1. When is the Best time to Remortgage?

The best time to remortgage is now. Don’t worry about what may happen to interest rates or house prices. According to some experts, house prices have been on the verge of imminent collapse for the past 5 years (during which time they have very nicely doubled) Whatever happens to interest rates, it is advisable to get a better rate

  1. Fixed Rate vs Variable?

A fixed rate offers security and makes it easier to plan. A variable rate is usually cheaper. A lot depends on the future prospects of interest rates.

  1. Bad Credit?

Don’t assume that if you have bad credit you cannot remortgage. The easiest solution may be to remortgage with your existing lender. However, there are specialists who deal with bad credit remortgages.

  1. Don’t Delay

Over 500,000 homeowners are currently on a higher mortgage than they need to be. Savings could range from small sums to potentially very significant savings. Don’t complain about paying 50p to park your car when you could save £1000s Remortgaging.

by: R.Pettinger 30/05/2007

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