What is a Remortgage in the UK?

Remortgage is the process of refinancing your current mortgage for a new, more favourable deal, often involving transferring the mortgage to another lender.

Should you remortgage?

Your mortgage payment is one of the biggest expenses for many property owners in the UK. Unfortunately, many people often overlook potential savings in this area.

While we actively search for better deals on utility bills or insurance, we rarely pay attention to potential savings associated with our mortgage. Are you losing money on your mortgage every year? If so, consider exploring the remortgaging process, which could lead to significant savings.

Remember!

Your mortgage is a long-term commitment that requires regular check-ups. Otherwise, you could end up overpaying by tens or even hundreds of pounds each month, resulting in substantial financial losses over time.

Currently, many lenders offer to cover legal and valuation costs for new customers, which can simplify the remortgaging process.

When Is It Worth Considering Remortgaging?

1. End of deal

Most mortgages in the UK offer a short period (e.g., 2, 3, or 5 years) with a guaranteed, low initial interest rate, after which the rate often increases. Even a small difference in interest rates can translate into significant overpayments annually. Compare offers from different lenders, as many of them cover most of the costs associated with remortgaging.

2. Adjusting the mortgage term

Your life and financial situation may change, so remortgaging allows you to shorten or extend the mortgage term. If you expect additional funds to repay the mortgage or want to hedge against potential hard times, consider adjusting the term of your mortgage.

3. Borrowing for home improvements or a new property

Are you planning a renovation, or considering purchasing another property? Remortgaging can provide you with additional funds for these purposes. However, keep in mind that you need to have the appropriate mortgage affordability and property value.

4. Changing the type of mortgage

Would you like to make regular overpayments on your mortgage, but your current bank does not offer this option or has significant limits? Remortgaging may be the solution. Look for a mortgage that meets your expectations, such as allowing larger capital repayments.

5. Divorce or change of owner

In the case of a change of property owner, such as due to divorce, remortgaging may be an opportunity to adjust the mortgage agreement to the new situation.

6. Purchasing additional shares in Shared Ownership or repaying the government Help to Buy loan

If you intend to become a 100% owner of a property purchased under the Shared Ownership scheme or using the government Help to Buy Equity loan, a remortgage may be the most appropriate solution for adjusting the mortgage terms.

7. Debt consolidation

Remortgaging could be beneficial for consolidating other debts. If you have high-interest loans or credit cards, remortgaging can help pay off these debts. However, exercise caution, as increasing debt on your mortgage may involve risks, as you are increasing debt secured against your property.

Here’s the remortgage process in the UK broken down into 5 simple steps:

  1. Assessment of Current Situation: Review your current mortgage agreement, check the end date of the current term, interest rate, and monthly repayment amount. Consider whether you want to change the terms of the mortgage to obtain better financial conditions.
  2. Searching for a New Mortgage Deal: Compare offers from different lenders, considering interest rates, additional fees, contract terms, and product availability.
  3. Application Submission: Choose the most suitable solution and submit an application for remortgaging to a new lender. Prepare the necessary documents confirming your income, credit history, and property details.
  4. Application Process: The new lender will assess your application, including verifying documents and valuing the property. After a positive assessment of the application and property valuation, an official mortgage offer will be issued.
  5. Completion: Upon acceptance of the application by the new lender and approval of the new agreement, the remortgaging process is finalised through a solicitor or conveyancer. Your new mortgage is activated, and the old mortgage is repaid. Remember that the remortgaging process can take several weeks from application submission to completion.

It is advisable to consult with an expert who will compare offers from different lenders for you and help find the most suitable financial solution. It will also be necessary to analyse your current mortgage agreement, income, and mortgage affordability.

To avoid rushing, it is recommended to start the process at least 3-6 months before the end of the current agreement.

It’s worth remembering that even after the first remortgage, you shouldn’t rest on your laurels. The most favourable offer today may be less attractive in a few months. That’s why it’s so important to stay up to date with the market or have a trusted broker who will do it for you.

What do you gain by choosing Prestige Financial Advisers?

  • Dedicated advisor to guide you through the entire transaction from A to Z
  • Free initial consultation
  • We operate as a Whole of Market mortgage broker in the UK
  • Exclusive offers unavailable elsewhere
  • Comprehensive service also available in Polish
  • Professional assistance from experts in optimising mortgages and protection

Our usual fee for handling a remortgage process in the event of changing the lender, changing owners, or rising a capital is £399 (for standard remortgages on residential properties). Upon starting work on the application, a non-refundable administrative fee of £100 is charged, and the remaining part is payable upon mortgage offer stage. The initial consultation and affordability assessment are free and non-binding.

In some situations, the fee may be higher, ranging between £499-£799, e.g., for Buy to Let applications, Shared Ownership, Help to Buy, non-standard properties, more than 2 borrowers, or problematic credit history.

A mortgage is a loan secured against your home.
Think carefully before securing your debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.

Some buy to let mortgages are not regulated by the Financial Conduct Authority.

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