RE-MORTGAGES

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Re-mortgages

Find a better deal

Re-mortgages

Whether your fixed rate mortgage is about to switch to a standard variable rate or you simply require an agreement that is better suited to your current situation, re-mortgaging could be the best option at your disposal. However, understanding the process and getting the best re-mortgaging deals can get a little confusing. Hopefully these answers can provide some clarity.

When Should I Re-mortgage?

Re-mortgaging is probably far more common than you imagine. In fact, 1 in 3 home loans is a re-mortgage agreement, so you aren’t alone in thinking that this might be the right course of action.

There are several situations in which you may wish to re-mortgage, but some of the most common are as follows:

 

  • To borrow more money for home improvements, paying debts, etc. when your current lender has said no.
  • To overpay on the mortgage, bringing down the loan size to secure a cheaper rate.
  • To take advantage of a lower LTV ratio when the value of your property has dramatically increased.
  • To get a better rate, especially when your current deal is due to end.

When Shouldn’t I Re-mortgage?

While appreciating the reasons for re-mortgaging is important, it’s equally vital to know when this option should be avoided. Otherwise, you could open the door to a very costly error.

Here are some of the situations in which re-mortgaging is ill advised:

 

  • Your mortgage debt is small (under £50k) because the switch fees will cancel out any savings.
  • Your early payment fees are large and will end up costing you a significant amount.
  • Your property’s value has dropped or you have very little equity.
  • You have endured credit problems since taking out the mortgage as the rates offered will be worse.

How To Get The Best Re-mortgaging Deals?

If you are planning to re-mortgage, it pays to take some positive steps before you make the application. Boosting your credit score and gaining proof of increased earnings may help your rates and the ability to borrow more.

One of the smartest things to do is get a lower LTV. If you feel that the property valuation you’ve received is too low, get proof of recent sale prices in the area to show that yours should be higher also. A lower LTV should translate to a lower interest rate.

Of course, it pays to check the market for the best deals, possibly with the help of a financial advisor. The choice of lender for your re-mortgage is just as crucial as it was for the initial mortgage. Get it right, and you could save hundreds of pounds each year.

What Else Needs To Be Considered?

Re-mortgaging will usually get you a better deal when the introductory fixed rate period reaches its conclusion. However, there are a number of fees and costs associated with re-mortgage applications and processes. Ignore them at your peril.

Before making any formal applications, always use a re-mortgage calculator to paint a clearer image as to whether a specific re-mortgage deal is the right option or not.

Any questions? The ask Active Mortgage today.

These articles are for information only and no advice should be conferred from the content within. Please seek independent financial advice prior to taking any action.

As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments

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Think carefully before securing other debts against your home. Your mortgage is secured on your home, which you could lose if you do not keep up your mortgage repayments.

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