Re mortgaging may involve getting a better deal from your current lender, or it may mean changing lenders if a rival is offering a more competitive rate. The remortgage usually will involve a fresh survey of the property taking place, and an updated valuation of the property, which will take into account any changes in value due to home improvements, or due to fluctuations in the local or national property market.
If you have already decided that you would like to re-mortgage you now need to find out if you can. There are three relatively simple steps:
Step 1
Contact your mortgage lender and find out if there are any early redemption penalties, these are sometimes called early repayment charges. How much will you have to pay out in any redemption penalties? Hopefully there will be no redemption penalties, but these will be recouped over time. Calculate how much your current mortgage costs over 1 year, including any penalties.
Step 2
The next step in re-mortgaging is to find a new mortgage, you want smaller monthly repayments and extra flexibility if you require it. There are plenty of companies and web sites online that you can use, but you could be turned away if you have problem credit. Our mortgage supermarket will help with your re-mortgaging, it is easy to quote and you aren't turned away for having less than perfect credit ratings. You can use the competitive, no obligation quote to compare against your existing lender to see if it could save you money. Compare your current repayment plan with that of the new mortgage deal to see if you’ll be saving money.
Step 3
Be sure to note down how much it will cost you to re-mortgage. Include redemption penalties, arrangement costs, valuation charges and any legal fees. Some lenders may offer a special deal, which offers free valuation and cover any legal fees as well.
Compare the cost of your current mortgage including any fees involved, against the cost of the new mortgage including any fees. Ideally the re mortgage should save you money straight away over the 1 year period. With costs involved it may take some time to recoup this initial layout, but annually you should be looking at making a saving. It is possible that you may have to compare differences over a 2 year period before you begin to see savings but the length of time over which you are willing to wait will depend on your personal preference and your circumstances.
On top of redemption fees, most lenders charge a sealing fee and/or a fee for releasing the deeds, which can add up to around another £100.
The total legal costs should be much lower than when you bought the property, as there are no contracts to prepare and there is no stamp duty to pay. However, you should still budget to spend £300-£500, unless your new deal comes with the legal costs paid by the mortgage company.
Re mortgaging, should save you money perhaps not straight away, but within a short span of time.