Welcome to our expert guide on remortgaging – the gateway to unlocking your financial freedom! If you’re a potential mortgage seeker or a property owner looking to enhance your financial situation, this comprehensive blog post is tailor-made for you.
We’ll delve into the intricacies of remortgaging, from understanding the purpose behind it to exploring the best remortgage deals available in the market. So, let’s embark on this journey together and equip you with all the knowledge you need to make sound decisions.
What is remortgaging and why does it need to happen?
Let’s start with the basics. Remortgaging simply means switching your existing mortgage to a new one, either with the same lender or a different one.
The primary reason behind remortgaging is to save money, and that’s where remortgage rates come into play. By finding a more favorable rate, you can potentially reduce your monthly mortgage payments, allowing you to allocate your hard-earned money elsewhere or invest in other ventures.
How to find the best remortgage deals
Now that we grasp the purpose of remortgaging, let’s dive into the exciting world of remortgage deals. Finding the best remortgage deal is essential to ensuring that you get the most out of this financial move. Here are some key options to consider:
Five-year fixed rate remortgage options
A key player in this arena is the 5-year fixed rate mortgage. With this type of deal, you can enjoy a stable interest rate for five years, shielding yourself from fluctuations in the market. This peace of mind is often what attracts many property owners to opt for a 5-year fixed rate mortgage.
When you choose a five-year fixed rate remortgage, your interest rate remains constant for the entire duration of the deal, regardless of any fluctuations in the broader economy. This predictability allows you to plan your finances more effectively, as your monthly mortgage payments will remain the same over the five-year term.
This option is particularly attractive when interest rates are historically low, as it gives you the opportunity to lock in a favorable rate, protecting you from potential rate increases in the future. However, it’s essential to consider your long-term plans and financial goals before committing to a fixed rate deal, as there may be penalties for early repayment or switching to a different mortgage during the fixed term.
Buy-to-let remortgage options
For those of you who have ventured into the realm of property investment, buy-to-let remortgage deals can be a game-changer. If you own one or more properties that you rent out, you might want to consider an interest-only buy-to-let mortgage.
Interest-only buy-to-let mortgage
This type of mortgage allows you to pay only the interest on the loan, keeping your monthly payments low and freeing up additional funds for property maintenance or other investments. With an interest-only buy-to-let remortgage, you do not repay the capital borrowed until the end of the mortgage term. Instead, you focus on covering the interest charges, which can be particularly advantageous for cash flow management.
Investors often use interest-only buy-to-let remortgages to maximize their rental income while benefiting from potential property price appreciation over time. However, it’s crucial to remember that, at the end of the mortgage term, you will need to repay the initial loan amount in full, which means you should have a suitable repayment plan in place.
How to research and compare remortgage deals
Now that you know about the different remortgage options available, it’s time to roll up your sleeves and begin the research process. Here are some steps to help you find the best remortgage deal:
Assess your current mortgage
Before you start looking for remortgage deals, it’s essential to understand your current mortgage terms, interest rate, and remaining balance. This will allow you to compare potential savings with new remortgage offers.
Utilise online comparison tools
The internet is a treasure trove of information when it comes to comparing remortgage deals. Online comparison tools allow you to compare interest rates, fees, and other terms side by side, making it easier to identify the most competitive offers.
Consult a mortgage broker
If you find the process overwhelming or want personalized advice, consider reaching out to a mortgage broker. A broker can analyse your financial situation, provide expert recommendations, and assist you in securing the best remortgage deal tailored to your needs.
Consider the overall cost
Remember that the best remortgage deal isn’t just about the lowest interest rate. Take into account any fees, such as arrangement fees or early repayment charges, when assessing the overall cost of the remortgage.
Read reviews and seek recommendations
Reading reviews from other customers can give you valuable insights into the quality of service provided by different lenders. Additionally, seek recommendations from friends or family who have recently remortgaged their properties.
How to remortgage effectively
Are you ready to remortgage your house? Let’s walk through the essential steps involved:
Assess your current mortgage
Before jumping into the process, review your current mortgage terms, interest rate, and remaining balance. This will help you gauge the potential benefits of remortgaging.
Research and compare deals
Thoroughly research the best remortgage deals available. Compare interest rates, fees, and other terms to find the most suitable option for your financial goals.
Calculate costs and savings
Use online calculators or consult with a financial advisor to calculate the costs of remortgaging, including any early repayment charges from your current lender, as well as the potential savings over the new mortgage term.
Get your paperwork in order, including proof of income, identification, and property valuation reports.
Apply for the remortgage
Submit your application to the chosen lender and patiently wait for approval.
Once your application is approved, your new lender will take care of the necessary legalities to complete the remortgage process.
Common remortgaging FAQs
Here are some common remortgaging FAQs:
Can you change the mortgage term when remortgaging?
Absolutely! Remortgaging provides the perfect opportunity to adjust your mortgage term. You can opt for a shorter term to pay off the mortgage sooner or extend the term to reduce your monthly payments. The choice is yours!
What should you do when remortgaging?
Preparation is key. Research thoroughly, compare deals, and have all your documents ready for a smooth application process. Consider seeking professional advice from a mortgage broker or financial advisor to ensure you make the best decision for your unique circumstances.
Do you need a deposit when remortgaging?
Unlike when you first purchase a property, remortgaging typically doesn’t require a deposit. The equity in your home serves as the “deposit” for the new mortgage. However, certain lenders may have specific requirements, so it’s best to check with them.
Who can remortgage?
Remortgaging is accessible to many homeowners, but it may not be suitable for everyone. Generally, you can consider remortgaging if:
- Your current mortgage term is coming to an end.
- Your current mortgage deal is not competitive anymore.
- You want to release equity from your property for other purposes.
- You want to switch from a variable-rate mortgage to a fixed-rate mortgage, or vice versa.
- Your financial situation has improved, and you want better terms.
It’s important to note that remortgaging eligibility depends on your individual circumstances and the policies of different lenders.
Remember, when considering remortgage rates and deals, research is your most potent ally. Explore your options, seek advice when needed, and embrace the journey to financial freedom.
Sett Mortgages has experience to support you through your remortgaging process, contact us here today.