We all know that spending your weekend searching through re-mortgage comparison tables is the last thing you want to do but it could save you a lot of money. Below is a quick guide detailing what you should be looking out for when searching for a new deal. We hope it helps if you need any further assistance contact a mortgage broker today and we will guide you through the process.
- Should you Re-Mortgage ?
- Who Shouldn’t Re-Mortgage ?
- Be Prepared to Re-Mortgage?
- How much Equity do you need to Re-Mortgage ?
Should you Re-Mortgage ?
There are so many reasons why you should investigate re-mortgaging with the main one being saving money and it could be big money.
For the majority of people their mortgage will be their biggest financial commitment and it would be foolish to not spend at least a little bit of time finding the best product available.
For some people sticking to their current lenders SVR ( Standard Variable Rate ) may be the best option but if you do make sure that it is through choice and not through laziness or you could find that you have wasted a fortune in interest repayments.
Who Shouldn’t Re-Mortgage ?
It all comes down to money, you have to decide if the potential savings out weigh the costs involved. You should always check the market but maybe you fall into one of the following categories and you find that re-mortgaging isn’t the right thing for you just now.
The Lucky Ones – Those of you who are already on a great deal eg. Currently the Bank of England base rate is at an all time low ( 26/10/2016 ) and some people may find themselves on an old tracker rate product in this case there may not be a deal on todays market that comes close to what you currently have.
The Unlucky Ones – On the other hand you may be locked into poor deal by hefty ERC’S ( Early Repayment Charges ) in this case it would be foolish to switch products or providers until the incentive period had passed.
Nevertheless you should be ready to move when the time is right check the market 3 – 6 months before your deal ends and be ready to switch and save.
Be Prepared to Re-Mortgage !
Before you re-mortgage you will need to make a few checks on your current product. Most mortgages have an incentive period 2, 3 or 5 years and if you try to repay the debt or switch to a new product during this period you will usually be subject to an early repayment charge.
Find out when the incentive period ends and start searching the market 3 – 6 months before this date, this will ensure you don’t slip onto your lenders SVR and waste money paying additional interest.
How much Equity do you need to Re-Mortgage ?
Currently you will need a minimum of 5% equity in your home to re-mortgage.
The best rates are reserved for those with the most equity if you currently own more than 40% of your property outright you should qualify for the best rates available on todays market.
What type of Re-Mortgage should I go for ?
Re-Mortgaging will present you with a world of options to choose from but how do you decide which deal is right for you. Should you take a fixed rate, tracker, discount, interest only or flexible mortgage the list goes on.
The answer depends on your circumstances for example if you intend to move home a year down the line it would be foolish to take out a 2 year fixed rate deal with hefty ERC’s.
Contact a mortgage broker today and we will assess your situation free of charge.
What term should I choose ?
If your goal is to be mortgage free as soon as possible you may consider reducing the term but you should also check if your new product allows you to overpay at any time as this has the same effect with the added bonus of being able to stop making the additional payments if you choose to do so.
If however you are struggling to keep up with your repayments or you can see additional financial commitments on the horizon eg you have a baby on the way it may be possible to extend the term and reduce your monthly repayments. This should be treated with caution, extending the term will mean you pay considerably more in the long run.
Check the Fee’s !
The Mortgage rate is not the only factor to consider when re-mortgaging. You need to do all your sums and make sure that you have selected the right product.
Some deals boasting a great rate may include booking fee’s, arrangement fee’s, valuation fee’s and legal fee’s to name a few. On the other hand a product with a slightly higher rate may be fee free and could even offer cashback making it a better product for you a lot depends on how much you want to borrow.
Use a Mortgage Broker !
A mortgage Broker deals with situations just like yours on a daily basis. Our Brokers use the latest software to scour the market for the best deals and know what questions to ask in order to find the right product for your personal circumstances. we do not charge a fee for our services and being part of the First Complete network gives us access to products that you won’t find on the high street.