What is a remortgage?
Remortgaging is the process of switching your existing mortgage to a new deal with a new one. This process is common in the UK, as homeowners are often looking for ways to reduce their monthly mortgage payments, pay off their mortgage faster, or free up equity in their homes. In this blog, we will explore the remortgage process in the UK and provide some helpful tips to make the process easier.
6 steps to a remortgage:
Step 1: Assess Your Current Mortgage
The first step in the remortgage process is to assess your current mortgage. This involves reviewing your current mortgage agreement to understand your current interest rate, payment schedule, and when your early repayment charges finish. You should also check your credit score to ensure that you are in a good position to remortgage.
Step 2: Shop Around
Once you have assessed your current mortgage, it’s time to shop around for a new deal. You can use comparison websites or speak to a mortgage broker to find the best deals available. When comparing deals, it’s important to look at the interest rate, any fees, and the overall cost of the mortgage over its term.
Step 3: Apply for a New Mortgage
Once you have found a suitable remortgage deal, it’s time to apply. You will need to provide proof of income and employment, as well as details of your current mortgage and any other outstanding debts. The lender will also conduct a credit check to ensure that you are a suitable candidate for the new mortgage.
Step 4: Valuation and Legal Work
Once your application has been approved, the lender will arrange for a valuation of your property. This is to ensure that the property is worth the amount that you are borrowing. Depending on the lenders policy in some instances these can do this electronically and may not need to visit your home.
Step 5: Offer and Acceptance
Once the valuation and legal work are complete, the lender will provide you with a mortgage offer. This offer will set out the terms of the new mortgage, including the interest rate, payment schedule, and any fees. The lender will also instruct a solicitor to handle the legal work involved in remortgaging. You can find more out about the conveyancing process here.
Step 6: Completion
The final step in the remortgage process is completion. This involves the lender transferring the funds to pay off your existing mortgage, and the new mortgage starting. This process can take several weeks, but once it’s complete, you will be on your new mortgage deal.
Tips for a Successful Remortgage
Here are some tips to help you successfully remortgage your property:
- Start the process early: Remortgaging can take several weeks, so it’s important to start the process early to ensure that you have enough time to find the best deal. You can start the process as early as 6 months before your current deal expires.
- Check your credit score: Your credit score will play a big role in your ability to remortgage, so it’s important to check it before you start the process.
- Speak to a mortgage broker: A mortgage broker can help you find the best deals and navigate the remortgage process.
- Look beyond the interest rate: While the interest rate is important, it’s not the only factor to consider when remortgaging. You should also look at any fees and the overall cost of the mortgage over its term.
- Consider overpayments: If you can afford it, consider making overpayments on your mortgage. This will reduce the amount of interest you pay and help you pay off your mortgage faster.
Remortgaging is a popular way for homeowners in the UK to reduce their monthly mortgage payments, pay off their mortgage faster, or free up equity in their homes. The remortgage process involves some additional steps but can be worthwhile if the new lender is offering a cheaper deal than your existing provider.