The growth of remortgages in the UK has spiked in the recent past. Many Britons are doing it to get better offers than their existing mortgage or to take money out against the property.
Mortgage is a string attached to one of the greatest possessions in life and it comes at a price of sacrificing many little things. No one plays around with mortgage repayments and will do everything and anything to cover the payment by the end of the month.
So, if a person is trying to find better deals, offers on meals out, discounts on groceries or shopping to save money for the mortgage; why not do the same or find a better deal for mortgage? This is where remortgaging comes in.
What exactly is remortgaging?
Remortgaging is the process of switching an existing mortgage from one deal to another deal with the same or a new lender. It helps you as a homeowner save thousands of pounds by grabbing attractive offers for longer terms with lower interest rates and lower monthly payments.
Especially in the UK after the Bank of England offered lower-rate deals in November of 2017, many took the opportunity to remortgage their houses. It saw a huge spike with more than 30% of the people showing their interest in remortgaging. There is also a 18% rise in the number of approvals of remortgaging since May 2017.
Banks and other lenders offer their customers good deals in the form of fixed rate mortgages which are usually for a period of two or three years. When this period ends, the mortgage is automatically switched to a variable interest, this can be higher or lower than the fixed rates depending on the benchmark rate. At this point, you can check your options of remortgaging and entering to a new fixed rate mortgage either with the same lender or a new one.
When looking to remortgage, if the fixed rates offered are higher than the competitors, try and negotiate with your current lender and if you are unable to grab the best deal then it is a wise decision to switch to a new lender who is offering lower fixed rate.
How to find the best options available to remortgage
You can find many good deals for remortgages just by searching online, but working through an authorised mortgage advisor is more beneficial in terms of getting the best deal that suits your requirement. Once the mortgage advisor has given your options, you can either go with one of those or speak to your current lender and see if they can offer you a better deal considering that you are already a customer of theirs.
Most existing lenders should be able to offer better deals for remortgaging as they would not want to lose their customers.
Any extra money saved as a result of lower mortgage repayments (arising from lower variable interest rates or better remortgaged rates) can be set aside for overpayments (you will need to check how much you can overpay without incurring a penalty); alternatively, you can spend the extra money by treating yourself!
So, right before the expiry of your initial fixed rate period (three to six months in advance), start looking out for remortgage options – either with your current lender to see if they can offer you a better deal than what you are already on, or switch to a different lender who is able to offer you a better deal.
Remortgaging involves a number of steps such as talking to existing or new lenders, checking your affordability, completing applications, property valuation, and other legal requirements. It can be an elaborate and time-consuming task, so it’s always better to use an authorised mortgage advisor to help you with this process.