A remortgage is a great opportunity for you to shop around
*A buy to let mortgage will be secured against your property. Some types of buy to let mortgages are not regulated by the Financial Conduct Authority.
There are many reasons why it may be beneficial to remortgage your existing mortgage.
Whether this be switching to a better deal, or borrowing money against your property, a remortgage could be the solution for you.
Our advisors at Resolute have access to a range of lenders across the market, which means we can be sure to secure the best remortgage deal for you, depending on your circumstances.
A remortgage is a great opportunity for you to shop around and look for a better deal. We can then assess your current circumstances and devise a plan based on your objectives.
The most commons reasons why our client’s remortgage.
- Switch to a better interest rate and mortgage product.
- Complete some home improvements.
- Consolidate debt.
- Removing or adding someone to your mortgage.
- Change your mortgage term.
- Reducing your mortgage owed.
- Divorce Settlement.
- Buying an investment property.
- Buying a car
- Providing children a deposit for their home purchase.
What is the remortgage process?
Once our advisors have completed a full review on your circumstances, and a tailored recommendation is provided, then the mortgage application process begins.
Like before, when you applied for your first mortgage, a full application must be placed with the new lender. This is then fully assessed by the lenders under writing team. The under writers will look at your income and expenditure and confirm this passes on affordability.
The lender will also complete a property valuation. This confirms the property is worth a certain value and meets the lenders minimum requirement. This can be completed through either one of three ways.
- Physical valuation. This is when a surveyor will come around and see the property.
- Drive by valuation. This is when the surveyor will drive past the house to confirm its existence but not attend the property.
- Desktop internal valuation. This is when the surveyor uses internal existing data to determine the property value.
Once all the checks have been successfully signed off by the underwriter, you will then receive the mortgage offer. A mortgage offer is usually valid for up to 6 months, but this is subject to each lender.
The next stage is the conveyancing process. A conveyancer is there to deal with the legalities of moving you from your current lender to your new lender. Most lenders will offer a remortgage solicitor service with the product you have chosen however, should you wish to use your own conveyancer, you can.
It is important you make the advisor aware if you wish to use your own conveyancer, as not all lenders have the solicitors on their panels.
Is remortgaging a good idea?
Like most things, just because you can, doesn’t mean you should!
Here are some examples why we like to conduct a full review your circumstances before any decisions are made, to be sure you are going to get the best outcome.
Your current mortgage may already be on a really good interest rate and product therefore, it may not work out financially beneficial for you to move to a new lender.
Most mortgages are locked in by Early Repayment penalties, and these charges can vary in costs depending on the lender and product you are currently on. Although there may be a better interest rate with another lender, this does not always work out financially beneficial for you to pay your penalty and remortgage to a new lender.
You will also find most lenders will charge account closure fees. These are some of the other costs to consider when remortgaging.
Remortgaging and increasing your borrowing will affect your properties Loan to Value. Loan to Value is how mortgage products are designed and each time you tip into the next tier, it could impact the products available to you.
By remortgaging, even if you are simply looking to pick a new deal, it is always worth weighing up any additional costs and fees involved as this may outweigh the saving you could make.
Do you need a deposit?
Where adequate, the equity in your property is your deposit. When you are looking to raise some additional money through a remortgage, you have to leave a certain amount of equity in the property. How much equity you leave in your home depends on the reason you are raising the funds for. For example, if you are looking to repay back debt, the lenders like you to leave more equity in your property compared to you raising money for home improvements.
What is Loan to Value? (LTV)
Loan to value is the term used to work out the percentage of the property you own, based on the value compared to the mortgage loan. By working out how much you own, this then determines the mortgage products and deals you are entitled to.
Generally speaking, the lower your loan to value, the better the mortgage interest rates you would be entitled to.
When remortgaging and increasing your borrowing, you could tip into the next tier for the loan to value products which could then impact the products available to you.
Debt Consolidation
This type of remortgage reason would be required, if you are looking to raise some additional money to repay back some unsecured credit commitments such as credit cards, personal loans or store cards etc. During our appointment, we will weigh up the overall true cost of the mortgage compared to your commitments to be sure that adding this debt onto your mortgage is the right solution. You must think carefully before securing any other debts against your home.
What about my current lender?
As well as looking at the remortgage market and seeing what other lenders will offer you, we will also compare this against what your existing lender is offering you to stay. If your current lender is offering you better internal products to stay, compared to a new lender, then this process is referred to as a Product Transfer.
This is a much simplified process as the lender requires no documents and no property valuation, just confirmation you are happy to proceed. However, by speaking to us we can compare the deals across the market and be sure this is the right solution for you.
Other reasons to remortgage.
Aside from residential remortgages, there are other property types that qualify for a remortgage.
Much like your residential mortgage, you can also look to remortgage your buy to let mortgage. Again you have the option of switching to a better mortgage product or looking at releasing some equity.
There would be certain restrictions around remortgaging a residential interest only mortgage as there is lender specific criteria that needs to be met and you may find your lender pool to be restricted.
It is possible to remortgage you home and look to raise the capital out of your equity to repay back your Help to Buy Government loan. There are restrictions around remortgaging and releasing money for consolidating debts, if you have no intention of redeeming the Help to Buy loan. More details on this can be discussed during a full review meeting with on of our advisors.
This where we start to see some more complicated cases, however, don’t be alarmed! We are here to help and guide you through the processes and come up with a logical solution to help your personal situation.
Costs involved.
There are costs involved when completing the remortgage process. Some are compulsory and some depend on your current lender however, all charges & fees would have been discussed in your appointment.
Mortgage Exit Fees – This is a charge from the lender when they close your account. Not all lenders charge, and this would have been illustrated on your original mortgage offer. This fee varies depending on your lender.
Early Repayment Penalties – This is only due if you are breaking free from your mortgage deal before your product is due to expire. These charges are displayed on your orignal mortgage offer and can vary depending on your lender.
Funds Transfer Fee – This fee is charged for the movement of money. This is because your new lender will pay off your old lenders mortgage.
Mortgage Valuation fees – Although most lenders will include the property valuation service in their remortgage product, this is not always the case.
Conveyancing / Remortgage Solicitor Fee – You will need a conveyancer to deal with the legalities involved. Although most remortgage products offer a ‘Free’ Remortgage Solicitor service, it is not entirely free of charge. There are still costs involved for Identification checks and land registry searches etc. All of these will be detailed in your initial solicitor pack.
Other fees – Depending on your circumstances, you may be charged a financial advice fee by the broker.
You may also have a product fee to pay, depending on the deal you have been recommended. In most cases the product fee can be added to your mortgage loan, but extra interest is charged.
Can you remortgage on a property that is currently mortgage free?
The answer is yes you can. A property that does not hold a mortgage is referred to as Unencumbered. Depending on your circumstances, yourself and the property must meet the lenders requirements to be successful for a remortgage.
By speaking to one of our advisors, we can assist in placing your remortgage application with the correct lender for you.
Reasons why you might want to raise a mortgage on your unencumbered property.
Like most remortgages, you may be looking to take out some of the equity and use the funds towards home improvements, repay back some debt or raise some money for a second house deposit.
Whatever you choose to do with the money, we will conduct a full review and recommend the best solution.