What Is Remortgage And When Is The Best Time To Remortgage?
There are many reasons why homeowners might be considering remortgaging their homes. They can be looking for a better deal because their present mortgage arrangement is about to expire, they want to release some equity, or they want a better deal.
Before going to a bank or building society to ask about the latest deals, you should know a few things if you consider remortgaging your property. However, don’t worry; Mountview Financial Solutions’ remortgage broker is here to help.
What is remortgaging?
In the beginning, a remortgage is moving from one mortgage lender to another without leaving your current house. Remortgaging most commonly happens when a mortgage deal is about to expire, and the owners have the chance to look for new terms that could lower their monthly payments.
As per the remortgage broker, depending on the lender you have decided to transfer to, the remortgage procedure is similar to getting a new mortgage.
You’ll have the best chance of getting the finest deal for your needs if you look into various lenders and offers available rather than just limiting your search to high street banks.
Additionally, you want to look into the expected length of the remortgaging procedure. It’s normal for the process to take up to 8 weeks after you file your application, although experienced conveyancers can greatly reduce this time.
When is the best time to remortgage?
#1 – Low Interest Rates:
Mortgage lenders provide new deals and mortgage rates. If you have had your mortgage for a long time, there is likely a cheaper deal elsewhere. However, your existing lender can also offer you a new term.
You can fix a lower interest rate for a time that suits you, e.g., a 2-year fixed rate mortgage term.
No matter what happens to other market rates, your repayments will not change. However, there is always a chance that rates could fall, in which case you would end up paying more than you would have, for example-, on a standard variable rate. The remortgage advisor says it is also worth noting that while fixing your mortgage’s interest rate, you may incur an Early Repayment Charge, payable should you decide to remortgage before the fixed period ends.
Also Read: Things You Need To Know About Directly Authorised Mortgage Broker
#2 – When does your current mortgage term expires:
You will begin to pay the lender’s usual variable interest rate, which is probably higher, once your current term ends, for example, after a fixed rate period. You must refinance your mortgage if you want to stop paying this rate.
What happens to rates at that particular time determines the difference between your product rate and the standard variable rate. You should look at the entire market to find out about new prices offered. As per the remortgage advisor, if you remortgage before your current product expires, such as during a fixed rate period, you can be charged an Early Repayment Fee (ERC).
#3 – Once your property has built a certain amount of equity:
Equity is the part of your home that you own outright or the part that isn’t liable to a mortgage. The loan to value ratio is the ratio of the amount of equity to the mortgage balance. The better the remortgage deals accessible to you, the lower the loan-to-value ratio and the more equity you own.
#4 – Whenever a remortgage is an option, and the costs are still less than what you owe on your current mortgage:
You may have to pay costs of some kind when switching mortgage lenders, whether it be an arrangement fee, an early repayment or exit fee, a valuation fee, or legal fees. It is important to determine whether remortgaging will save you money in front of these expenses.
Also Read: Understanding Remortgaging with Precision
Conclusion:
Our expert remortgage broker in East London suggests there is no fixed deadline to remortgage your home other than when your current deal expires. However, when base rates rise, and home values rise, it can be more cost-effective for you to remortgage before your contract expires to prevent the rate increase or to use the greater home equity if the value of your property has increased.
For more information and guidance about residential mortgages, contact Mountview Financial Solutions in London, which has provided the right financial guidance for a decade.
