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Guide to re-mortgaging

What is remortgaging?

When purchasing a home you would have most likely taken out a mortgage. Although the mortgage to you would have agreed could have been twenty five to thirty years, the mortgage deal will last between two and five years.

After the deal has ended your mortgage rate may change and could result in higher monthly repayments. This is due to the mortgage interest rate being charged at the lender’s standard variable rate (SRV) once a fixed deal ends. At this point it would be worth looking for new mortgage deals to potentially achieve a more suitable fixed rate, and keep your repayments low and affordable.

Why remortgage?

Below are some reasons why you might want to remortgage:

  • Your current deal is about to expire/ has expired and has reverted to the lenders SRV
  • Your circumstances have improved and you may be able to obtain a better deal
  • You want to borrow money against your property
  • Your property has risen significantly in value
  • You want to switch to a type of mortgage, such as a fixed, capped or tracker

What are the costs of remortgaging?

The cost of remortgaging is dependent on various circumstances such as the terms you may have in place on your current mortgage, and the deal you may have been offered by the new lender.

When taking out your first mortgage you may remember some mortgage deals having large arrangement fees, while others had lower costs. Just like then, when remortgaging you will need to look at the different fees that could affect you. The main one to look out for is early repayment fees (also known as redemption penalties).

When taking out a mortgage, you should always try to think ahead to your next one. It’s also advised to find a mortgage broker who will go through all these terms with when a mortgage deal is offered.

If you are buying your next home and want to avoid early repayment fees, you may have the option of porting your current mortgage.

How to remortgage?

The best way to make a decision on remortgaging is to speak to an independent mortgage adviser, or an IFA who specialises in mortgages. Your adviser can review your current deal and take your financial circumstances into account to find you the best deal from the whole of the market.

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