remortgages & Rate Switching guides
Remortgages and Rate Switching can be really quite easy. The first, and probably most obvious time, is the end date of your existing mortgage deal. This is an ideal time to switch products. By not remortgaging at the end of your current rate term, it’s likely you’ll end up on your lender’s Standard Variable Rate. Probably meaning your repayments will go up.
If you’re on a deal without a set end date, it can be a bit more difficult to know when’s a good time to change deals. But, you can always call an adviser to discuss your options.
Changes in personal circumstances can signal when it’s time to remortgage. House prices might have increased. You might have paid off enough of your mortgage to be able to move down a Loan to Value tier. Or you may want to borrow more money, for example for home improvements.
When choosing a mortgage, you’ll need to consider different mortgage interest rates and fees you’ll be charged.
There are two main types of mortgage rate, there are Fixed Rates, where the interest you’re charged remains the same for several years, usually between two and five years. And there’s variable rates, where the amount you’re charged can go up and down.
Capped rate mortgages are rare, so if you’re going it alone, you’ll have to search well to find a selection of rates to choose from.
Mortgages with a capped rate are in effect variable rate mortgages. However, they have one important difference. That important difference is: an interest rate ceiling, known as the “Cap” above which your repayments can’t rise.
A guide to remortgaging your home
Having possibly come to the end of your fixed term, you might want to start looking for a better deal on your mortgage. Perhaps you could be looking to free up equity to extend your home, for renovations or to consolidate debts. Whatever the reason, we have a number of guides including the following.
How does remortgaging work?
Remortgaging is the process of switching your existing mortgage to a new deal. You can remortgage with the same lender or a different provider – you’re not moving home and your new mortgage is still secured against your existing property.
There’s a number of reasons why people remortgage their homes. These can include:
- Getting a better deal: Your current mortgage deal could be coming to an end – most fixed-rate mortgages last between two to five years before they become a standard variable rate mortgage. You may want to find better interest rates. Maybe you’re looking to start over payments so you can pay off your mortgage quicker, but your current lender won’t let you.
- Access to a lump sum: Some people remortgage their property to get access to a sum of money. You may be able to free up cash to pay for an extension to your home, for example. But remember, by increasing your mortgage, your monthly payments are likely to go up. Depending on your age, you might be able to increase how long your mortgage lasts to reduce your monthly commitment.
Remember – your home may be repossessed if you don’t keep up repayments on your mortgage.
What fees are there when you remortgage?
When you remortgage your home, there’s often an arrangement fee on a new mortgage. You may also need to pay:
- Valuation fees and solicitor fees.
- An administration charge.
- Exit fees if your existing mortgage hasn’t yet come to the end of its term.
When’s best to remortgage?
- If your fixed-term deal is coming to an end. You’ll be moved to your lender’s standard variable rate (SVR) when your fixed-rate deal ends. This is usually higher than your original deal.
- Maybe get a better interest rate. You may be able to find a mortgage with a lower interest rate than yours for the same term, so your monthly payments will go down.
- Want a more flexible deal. Not all mortgages allow over-payments or mortgage holidays . If these are important considerations for you, then you may want to try to switch to a more flexible deal.
- If your home’s value has increased. You may be able to get a better deal because of changes to the loan-to-value ratio
- Wish to borrow more. To use some of the equity you’ve built up in your property, for say home improvements.
- Need to consolidate debt. You might want to consolidate debts to reduce your monthly outgoings, or to borrow at a lower interest rate.If