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Should you remortgage?

Remortgaging is when you move your mortgage from one lender to another.

There are a number of reasons why you may want to move your mortgage and understanding these can help you decide if it’s the right time. 

5 reasons you may look to remortgage:

1. Your current mortgage rate is coming to an end

When your existing mortgage rate ends, you’ll usually move onto your lender’s standard variable rate (also known as SVR). This can be more expensive than your current rate so your monthly mortgage payments may increase.

To avoid paying more, you could switch mortgage rates with your current lender or remortgage to a new lender in readiness for when your current mortgage rate finishes. It’s a good idea to start researching your options at least 6 months beforehand so your new deal or mortgage can start as your current one ends.

2. You want to find a better deal

You may find a lower rate that could reduce your monthly payments meaning you could pay less interest over the term of your mortgage. A better deal for you could also mean finding one that allows you to overpay or change your mortgage term.

There may also be other reasons to change your mortgage that are specific to you. You can speak to a mortgage advisor if you need help or support.

Keep in mind, if you remortgage before your current deal ends you may have to pay an early repayment charge (ERC) and other fees. If you decide to do this, make sure any potential savings outweigh the potential charges. Alternatively, you can avoid these fees by waiting until your current deal ends before remortgaging. 

3. You’re looking for a higher standard of service

If you’re not satisfied with your current lender, you may consider remortgaging to a new provider. For example, you may want:

  • better communication

  • easier access to your accounts

  • higher standards of financial advice

  • great customer service

It’s important to be happy with your mortgage provider. However, you’ll need to think carefully about when you move to a new lender as there may be fees or charges to pay if you leave before your current mortgage rate ends.

4. You want to borrow more

You may want to borrow extra money against your home.  This could be for many reasons such as wanting to carry out home improvements or fund further education. If your current lender is unable to increase the amount you want to borrow or offer you the deal you want, you can speak to another lender to see if they can help.

Keep in mind, your payments could increase if you borrow more so you need to be sure you can afford them. 

5. The value of your home has increased

If the value of your home has gone up, you could benefit from a lower loan-to-value (LTV) ratio. The LTV is your outstanding mortgage amount in relation to the value of the property, shown as a percentage.

Having a lower LTV could mean you are eligible for lower rates. You can contact your lender to find out what your LTV ratio currently is and, if it has changed, what new interest rate options are available to you. If your current lender is not able to offer a deal you want, you can then see what other lenders can provide.

Keep in mind

  • Remortgaging is not suitable for everyone and it may not be the right time for you. You need to think carefully about remortgaging and consider all costs before deciding if remortgaging is financially worthwhile for you.

  • When remortgaging, you will need to complete a new application to tell your new lender what you need from them, and to show them you can afford the payments. Your new lender will need to see proof of earnings and complete a full credit check, this is perfectly normal.

  • Given the unique situations that many people are in, there have been some changes to how affordability is being assessed by mortgage providers. It’s important that if your income has recently changed, or you think it’s likely to change in the future, you include this in your application.

Think carefully before securing other debts against your home.

Your home may be repossessed if you do not keep up repayments on your mortgage.