The 5 Minute Guide to Remortgaging

The Momentum UK Team 12 December 2013

Whether you’re moving up the property ladder, downsizing or trying to get a better deal on your current home, remortgaging can have a big impact on your finances.

Here’s our 5 minute guide to getting it right:

The Golden Rules for Remortgaging

  • If you’re remortgaging your current home, DON’T leave it until the last minute. The legal work could take longer than you think
  • Know exactly when your current rate expires. Remortgage too soon and you could incur early repayment charges; too late, and your monthly mortgage payment could go up
  • It’s a good idea to get at least one independent valuation
  • Shop around, shop around, then shop around some more. Don’t just stick with your current lender because it’s easy

Work out the real cost

Remortgaging is only worth it if you'll save comfortably more than you'll spend doing the deal. To be sure of this you'll need to add up any fees and charges involved in switching lenders, and weigh them up against the total difference in your mortgage repayments over the period in question.

In recent years, pressure on lenders to keep headline rates down has meant that some application fees have risen. This is especially important when you’re remortgaging, as you will usually have to pay an exit fee to leave your current provider as well. Some lenders will offer to pay your remortgaging costs if you switch to them, but you can probably expect a less competitive rate in return.

Go it alone or get advice?

Plan ahead with MoneyHub Around half of mortgage applicants use a mortgage adviser to get the best deal; the other half prefer the DIY option. Here are some top tips for each approach:

Going it alone:

  • It can be a good idea to start with your own lender. Get a quote from them and challenge them to get you a better deal. If you threaten to switch they may find you a better rate
  • If you want to switch, make sure you get detailed quotes from all the lenders you are interested in
  • Work out the true cost of the mortgage by adding up all the fees associated with switching. Then add up any savings you will make over a year, and subtract the cost to see if it’s worth it
  • Remember that valuation and legal work could take 4-8 weeks, so start in good time

With an adviser:

  • Always ask them whether they are “whole of market”. If the answer is yes then they can look at every suitable lender to find you the best deal, rather than having to stick to a select panel of lenders.
  • Sometimes advisers are able to negotiate mortgage deals that aren’t available anywhere else, so make sure they’re working as hard as they can for you
  • Almost all advisers charge the lender commission on your mortgage, so some are fee free for you – particularly if they only operate a telephone service
  • Although advisers sometimes have access to exclusive deals, certain lenders don’t want to work with advisers and will only offer their best rates if you go direct. It is a good idea to supplement your broker’s work with some research of your own

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