Remortgaging is something many homeowners do – but a recent study shows that not enough people who can remortgage take advantage of it.
It may be that they are unaware that they can remortgage or don’t know what it is. Or it may be a task that they have put on the back burner.
Either way, the study found that mortgage borrowers pay £14.5bn a year in unnecessary standard variable rates.
Put simply, if they moved their mortgage to a better deal, they could be paying less and saving more!
But if the thought of remortgaging sounds like too much hassle, then let us explain more about remortgages.
What is remortgaging?
The simple explanation about remortgaging is that it’s when you move to a new mortgage deal with a new lender.
Sometimes people stick with the same mortgage provider and transfer to a new deal – not quite a remortgage but the principle is the same.
Some mortgages can last up to 35 or even 40 years these days, but if you never look at your mortgage deal after the initial rate period you could end up paying more.
Over the lifetime of a mortgage that could be a lot of money. So, if that period has ended, we advise that, just like other areas of your finance, it’s best to review your situation.
We contact our clients at the end of their current deal, but if you’re not a client then we’d advise you review your mortgage deal.
Why would you remortgage?
First of all, while Co-Navigate recommends remortgaging, we don’t recommend it in every case.
Our ethos is in looking at your individual circumstances and needs, and if remortgaging isn’t going to be the best for you, we won’t recommend it.
There are many reasons why someone chooses to remortgage. These can include:
- Current fixed/variable rate is coming to an endYou want a better rate than you are currently on
- You want to make overpayments but your current deal issues penalties
- You want to borrow more money to make improvements
- You want to switch from interest-only to a repayment mortgage
- Your home’s value has increased
What to consider
Before deciding to switch to a new mortgage deal, you may want to make some considerations.
Check any fees on a new deal. We would give advice to our clients if the fee was worth paying or not.
Are there an early repayment charges on your current deal? Again, we would know before advising our clients, but if you are looking independently make sure it doesn’t outweigh the benefit of switching.
Is remortgaging for everyone?
Remortgaging may sound perfect for saving money, but that isn’t necessarily always the case. There are a number of reasons why you may not want to remortgage. For example:
- Your early repayment charge is large
- Your mortgage debt is small, especially less than £50,000. It may not be worth switching lender simply because you are less likely to make a saving if the fees are high. In fact, some lenders won’t take on mortgages below a certain amount, for example £25,000
- Your home’s value has dropped
- You have little equity
- You’re already on a good rate. You may be already on such a fantastic deal that it’s difficult to beat. Of course, you may need to review it again in the future
- You have had credit problems since taking out your last mortgage.
As the Money Advice Service shows, remortgaging doesn’t always mean you get a better deal. If the fees that are more than the saving you make, for example, we will advise you.
What should you do?
If the thought of checking out the deals for mortgages leaves you feeling cold, then don’t worry.
You can contact us and let us take a look at whether remortgaging is best for you. We are an independent mortgage broker and have access to deals you may not find online or on the high street.
It’s worth reviewing your mortgage because you could end up saving money.
Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage