Remortgage
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Remortgage
Luke Platt is back to give us a recap on remortgaging.
What is a remortgage and how does the process of remortgaging work in the UK?
A remortgage is where someone is looking to refinance their mortgage. It could be either to move over to a new rate or potentially to look at additional borrowing. It could also be that you’re looking to purchase another property. You could be looking at doing home improvements, debt consolidation, and so on.
In terms of the process, the best thing to do is reach out to us here at Smiths Financial and we would look into the affordability of the remortgage for you. We do that by gathering information from you in what’s known as a fact-find.
We look at your income, your monthly outgoings, any credit commitments that you may have, the property value and so on. We would then be able to advise you on your options going forward for the remortgage.
Can I switch lenders when remortgaging?
Yes, it is possible to switch lenders when remortgaging. If you stay with your current lender and switch products, this is known as a Product Switch or Product Transfer. If you switch lenders then you would remortgage. With additional borrowing, you can apply for a further advance with your current lender, or when remortgaging with a new lender.
When you speak to us, we will advise you of the affordability that will be available for your remortgage amount – we’ll talk that all through with you.
How long does it take to remortgage? How often can I remortgage my property?
It all depends on what you’re looking for. If it is a simple switch over to a new mortgage without any additional borrowing, it can be done quickly.
If you are looking to borrow more, it can take a little longer. Lenders will want to check your incomes and your outgoings to support that additional borrowing, so it can take longer than a standard like for like remortgage.
In terms of how often you can remortgage your property, generally, people only tend to remortgage when their current deal comes to an end, such as at the end of their 2 year or 5 year deal. But you can do a day one remortgage in some cases. For example, if you had purchased your property with cash and then wanted to remortgage from day one to release some equity.
Again, just speak to us here at Smiths Financial Solutions and we’ll explore what you’re after in terms of your remortgage and advise you accordingly.
What are the main reasons why people choose to remortgage?
Generally it’s because the existing deal is coming to an end. That would be the main reason why people are looking to remortgage. It is always good to compare the rates of other lenders compared to your current lender, to see if you can get a better deal.
Other reasons could be debt consolidation or home improvements such as an extension. They may also want to see what rates are being offered by other lenders.
What factors should I consider when deciding to remortgage?
A remortgage is all based on the property value. As we all know, property values can go up and they can go down. Loan to Value is a big factor at play here, and that Loan to Value will affect what interest rates the lenders will offer you.
For example, if you have a lower Loan to Value – so you own more of the home and are borrowing less – you could potentially get preferential rates from mortgage lenders.
Again, reach out to us here and we’ll go through a fact find and advise you of your options for a remortgage.
Can I remortgage to consolidate my debts?
Yes, you can consolidate your debts onto your mortgage. It’s not always advisable, but some people do that to make their monthly payments more manageable and affordable. Again, speak with us and we’ll take you through the process. We’ll look at the options available to you.
What happens to my existing mortgage when I remortgage?
Generally, if you are switching lenders from bank A over to bank B, bank B would do the affordability calculations. They would make sure it would be affordable for you. In the end, they would send the money over to Bank A to clear off that particular mortgage. This is also known as redeeming your existing mortgage.
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What happens if I don’t remortgage after my deal expires?
Your mortgage offer should state what will happen with regards to a fixed deal ending.
You’ll be in a fixed rate for a certain period of time – that might be two, three, five, seven or 10 years – and after that period of time, if you don’t remortgage you will automatically go on to the standard variable rate of that particular lender, which can be very high.
You might already be on that higher variable rate. Speak to us and we’ll take a look at that all for you and advise you accordingly.
Can I remortgage if I have bad credit?
Generally I would say yes, you can still remortgage because you already have a mortgage. It might be that you’ll be on a five-year fix and then within those five years, something happened and you’ve ended up with a default, a CCJ or a bankruptcy.
Even if you can’t remortgage, it’s likely that your current lender will be able to put you onto a new product. Again, speak with us and we’ll have a look at your credit report. We’ll speak to the lenders for you and see what your options are going forwards.
Will I have to pay any fees or penalties when remortgaging?
The lenders have a period of time ahead of the end of your deal, which is often six months, referred to as a transfer period. It’s worth noting that some lenders have a less period of 3 months. During this time you’re able to shop around and see what other lenders are available to you.
I would recommend you speak to us here at that point and we will look at switching you over to a new lender as soon as your deal ends. That way you may not incur any fees or penalties.
If it transpires that you are in a five-year fixed deal, as an example, and you’re looking at remortgaging in year one to do home improvements, or potentially purchase another property, there may be a penalty or a fee on that called an early repayment charge.
You can find the details of that in your existing mortgage offer. If in doubt, get in touch with us here at Smiths Financial – we’ll take a look and advise you accordingly.
How much could I potentially save by remortgaging?
We’re recording this in January 2025 and we’re in a market now where interest rates are starting to slowly fall compared to where they were maybe 12 or 18 months ago. A lot of people fixed in higher rates back then.
A mortgage broker like ourselves here will have a look at all the lenders that are available to you based on your affordability. We can then tell you specifically how much you could potentially save by remortgaging.
What documentation will I need to provide when remortgaging?
It’s the standard documentation. You would need up-to-date pay slips and bank statements. We would also take identification documents and any additional documents to support further borrowing, if you need it.
We may need some quotes for lenders based on any home improvements you’re looking to do, for example.
Will I need a new valuation or survey when remortgaging?
If you are moving over to a new lender, it’s very likely that they will carry out a valuation. If you’re staying with your existing lender and you feel that your property price has gone up, it may be prudent to get another valuation done.
It depends on the type of property and any improvements you’ve made since you took out your mortgage. Just get in touch with us here at Smiths Financial Solutions. Once we know your situation and what you’re looking to do, we can advise you on how to proceed.
Is it harder to remortgage if I’m self-employed or a contractor?
It’s no harder than if you’re employed. It’s the same process. I can understand why self-employed or contractors might say it’s harder, but they’re still paid and they still have bank accounts.
The self-employed have SA302 Tax Calculations and CIS contractors might have 12 or 13 payslips, as opposed to a standard employed person who receives these once a month. That’s what we would need to explore your remortgage options.
What happens if my property value has decreased since I initially obtained my mortgage?
If you bought at 95% Loan to Value, so you had a 5% deposit, and your property value has decreased, it could be that you could be in negative equity. With this we would advise you to speak to us here. Most likely you’d still be able to get a mortgage, but it would potentially be with the lender you are currently with.
What are the advantages and disadvantages of fixed rate versus variable rate remortgages?
With a fixed rate, you know what your monthly payments are every single month. A variable rate means that your monthly mortgage payment could be different from month to month.
In terms of the advantages and disadvantages, a fixed rate gives you more security in terms of knowing what your monthly payments are going to be for a set period of time.
The advantage of a variable rate, however, is that it could go down and your monthly payments could go down, as well. With a fixed rate it would stay the same. There are lots of different advantages and disadvantages for both of these.
I would recommend you get in touch with us here at Smiths Financial Solutions. We’ll have a discussion about how you want your remortgage to work for you. We focus on your budgeting needs and the savings you could gain from remortgaging.
Can I remortgage if I’m nearing retirement age?
Various different lenders have increased retirement age lending limits. With some it is 70, other’s it’s 75. We have a lender that goes up to age 90, although I don’t think anyone really wants a mortgage for that long.
That said, there are lots of different later life retirement mortgages out there. So give us a call here at Smiths Financial Solutions. We’ll do a fact-find with you, work out your needs and advise you accordingly.
What else do we need to know about a remortgage?
Remortgages are a bit like a phone contract, I remember when I was a bit younger I had an iPhone 8 or 9 – I was on a two year contract and then I switched onto an iPhone 10 or 11. A remortgage is similar, and it’s worth doing the research.
It’s also worth getting in touch with us here at Smiths Financial Solutions. We can help and give you the best possible service, explaining which mortgages are available to you.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
