The most common reason for re-mortgaging is to secure a better rate, this usually occurs when a borrowers current deal has come to an end and their lender reverts the mortgage to their SVR ( Standard Variable Rate ). This process can lead to the borrower paying significantly more in interest repayments. Please see the illustration below.
|Loan Amount||Rate||Term||Monthly Cost|
|Standard Variable Rate||£100,000||4%||25 Years||£528|
|Current Deal||£100,000||2%||25 Years||£424|
It’s important to remember that the re-mortgage rate is not the only factor that should be considered when selecting a product. Using an online comparison table may highlight the best rates available but you should also be aware of the overall cost of the product. Many of the best re-mortgage rates will include hefty fees such as a valuation fee, booking fee or an arrangement fee.
For example, if you are only borrowing £50,000 paying a £2,000 fee to secure a 2% fixed rate product over a 2 year period would end up costing more than taking a 3.5% fee free mortgage deal. In cases such as this paying the fee would only benefit those who wanted to borrow a significantly larger sum.
You also need to consider the fact that you may not qualify for the best rates on the market due to criteria laid down by the lender, for example, your LTV ( Loan to Value ) or your earnings combined with a range of other factors may make these products unavailable to you. This could lead to you wasting a lot of time applying for products that you have no chance of getting accepted for.
Our mortgage brokers utilize the latest software to search through a comprehensive list of lenders and use their knowledge and experience to select the most appropriate re-mortgage deal for you. Contact a mortgage broker today and we will assess your situation free of charge saving you time hassle, stress and money.