Want to cut your monthly repayments, pay off debts or reduce the term of your mortgage?
The solution may be for you to remortgage – the process of moving your mortgage from one lender to another – here’s how:
1. Gather your paper work
You should be thinking about a remortgage around three to six months prior to end of you current deal.
Gather your latest mortgage and bank statements together to see the amount of money you are paying for your current mortgage, although if your deal is a tracker or another variable deal, it may have decreased in recent months, so you will want to check how much you were paying before the decline in rates.
2. Find out the cost of moving
Ensure to check the small print for any early redemption charge (ERC) especially on discounted, fixed, cash back or capped deals, which could make a remortgage too expensive.
Another thing to note would be the exit fee.
Maybe calling your lender to obtain a quote for paying off the amount you owe plus any other chargers, and checking that the exit fee you are quoted matches the one featured on the mortgage agreement, as lenders are not allowed to push up these fees once you have signed up for a loan.
3. Be aware of the restrictions
Don’t assume that your ECR will automatically end simultaneously with your fixed or discount rate ends, as some loans have overhanging tie-ins.
You may find that you need to pay the lender’s standard variable rate (SVR) for a set period after the initial deal ends.
4. Find a mortgage you want
You need to decide on the type of product you want, for example, a fixed rate, tracker or variable rate, then track down a deal and speak to the lenders directly etc.
If you’d prefer to not do the legal work on your own, you can use a mortgage broker.
5. Work out the involved fees
The deal you are planning to remortgage to may not come cheaply and you may need to pay legal fees, application/arrangement fees and a valuation fee.
Fee-free deals where lenders pay for or refund legal and valuation costs do exist although they usually come with a higher interest rate.
6. Ask your lender to match or better your chosen deal
You may be set on the deal you have chosen but it’s worth asking to see if your current lender is willing to match. If the offer is similar, moving to that will save you hassle and time.
7. Apply for the new deal
If you’re unhappy with your current lender’s deal, you’ll need to apply for the new deal you have found.
You can generally do this around three months before your existing special offer rate expires.
It’s smart to start early as if you are turned down, you have a chance to look elsewhere.
8. Waiting game
Your new lender should send you an agreement in principle based on the details you have provided, then commission a survey of your home to make sure they’re happy to accept it as security for the loan.
Once any fees are paid for and the lender’s survey is completed, your new lender will send you a remortgage offer and then deal directly with your current provider.
After that, you should receive a completion statement.
The process will take at least a month – longer if you are borrowing extra when you switch.