But how exactly does remortgaging work? What is it? And how often do you need to remortgage? Grab a cuppa, we’ll be explaining all this and more.
Understanding what remortgaging means
Remortgaging is nothing new – and it’s certainly nothing to worry about.
But it’s not about moving house. Remortgaging is when you apply for a new mortgage but stay in your existing property.
The average mortgage term (the amount of time it will take to repay the mortgage) is 25 years. Obviously, nobody knows what life will throw at them over that period so when you first take out a mortgage you often sign up to a ‘deal’ which determines what interest you’ll pay (and therefore what your monthly repayments will be) for the first two, three, five or even ten years.
Once the deal period had come to an end, instead of letting your mortgage roll onto your lender’s standard variable rate (which is the default mortgage interest rate your lender will charge after your mortgage deal period expires) most homeowners remortgage to find a more suitable ‘deal’.
Why do you remortgage?
For starters, standard variable rates are generally more expensive. So you might be paying more interest (and therefore more money each month) than you actually need to, if you haven’t remortgaged before your deal period comes to an end.
And secondly, if interest rates are low (and right now they are at an all-time low) you may be able to find a more suitable mortgage deal that works for you in your current financial circumstances.
So, how does remortgaging work?
Here at Mortgage Confidence, we know the world of property can be hard to get your head around – especially if it’s not something you are dealing with every day.
Mortgage advisers specialise in finding lenders (mortgage providers) who will meet all your mortgage needs (and more). They do this by looking at your personal circumstances and recommending suitable mortgages for you.
But not only do they manage your mortgage application, they’re also there to provide support throughout the process.
What remortgaging options do you have?
When you come to the end of your mortgage deal period, you have two options:
Product switch – this means you stay with the same mortgage lender – whether it’s Santander, Barclays, a more specialist lender like Aldermore or other. However, you are switching from one mortgage deal to another mortgage deal.
The benefit of a Product Switch is that there is no underwriting. This means:
- It’s not assessed in the same way as a complete remortgage with a different lender would be.
- Which makes it quicker
However, the downside is you might not always get the most competitive rate compared to other mortgage term deals on the wider market.
A full remortgage – this means you will switch your mortgage from one lender to another lender.
The benefit of a full remortgage is that you have access to the most competitive interest rates. Plus:
- You can find a mortgage deal that will suit your current financial situation
- If applicable, you may be able to release some equity in your home for additional cash (if needed)
Ready to remortgage? Or want to find out more? Jo offers a no obligation 30-minute call. Get in touch today.