When to consider a remortgage?
We will guide you through the mortgage market
There are many reasons to look at a remortgage, maybe you have come to the end of a fixed rate period? Or you wish to release some money from your property for a DIY project. Maybe you would like to consolidate other debts into one payment or your credit rating has improved over time, so you may be entitled to a better interest rate. And remember remortgaging could also potentially save you hundreds of pounds per month.
A mortgage is a long term commitment – typically you won’t be free of monthly repayments for 25-35 years. But that doesn’t mean you should neglect this area of your personal finances in the short term – you may not be able to get rid of your debt, but you can make sure you’re always getting the right deal on it. Make sure to compare typical remortgage rates.
Depending on your circumstances, remortgaging could save you money. You won’t always be able to find a cheaper deal, but if you don’t at least consider remortgaging regularly there’s a chance you’re missing out on the opportunity to reduce your repayments or the total cost of the loan.
A Remortgage Could Help You To…..
- Save Money – If your mortgage has moved onto the lenders standard variable rate then remortgaging will save you money on your current repayments. Any reduction in the term of your outstanding mortgage could also potentially save you £££’s in interest paid.
- Avoid Moving Home – Extensions, garage conversions or loft conversions are all ways to improve your current home and avoid the need to move. A remortgage or further advance can fund these improvements.
- Adapt To Changing Circumstances – A change in financial situation should always trigger a conversation with your broker regarding your mortgage. Be this a new job, pay rise or even a larger family!
- Consolidate Your Debts – Have you considered releasing some of the equity in your home to reduce your monthly debt burden? Whilst this can reduce your monthly commitments it can also increase the interest paid in the long term – this should be carefully considered and you should seek professional advice from a broker.
- Pay Off Your Mortgage Early – Plans to retire? Remortgaging onto a favourable rate and overpaying could reduce your term significantly and bring forward those plans for your retirement.
- Raise Money – Do you need to raise money? Perhaps for a wedding, or a deposit for one of your children? The increasing property market and rising salaries may offer you a cost effective way of doing so.
There are a range of different remortgage products available on the market, and it’s possible to use a broker to shop around for the type which suits you best.
In essence, these types of deals could be no different to the first mortgage you take out. But depending on your financial situation at the time that your first, or subsequent, mortgage deals have come to an end, as well as the state of the mortgage market itself, you may want to consider a different type of remortgage.
What is a product transfer mortgage?
So, how do you define a product transfer mortgage and what does this term actually mean?
A product transfer is when you move from your existing mortgage deal to a new one with your current lender. While it is not a new concept, a product transfer is a lesser known option which may be a good alternative to remortgaging, depending on your circumstances.
Mortgage product transfers explained
This example should help put things into perspective: Supposing you’re currently on your lender’s Standard Variable Rate (SVR) and it’s increased recently due to an interest rate rise, you may consider moving on to a fixed rate mortgage plan.
Assuming you want to keep your loan amount the same and are happy with your current lender, this would be classed as a product transfer because you’re just moving from one product to another.
What is the mortgage product transfer procedure?
The product transfer process is typically very straightforward. This is due to the fact that, unlike if you were requesting an advance or going down the remortgage route, it is unlikely that a formal valuation will need to be carried out on your property.
Product transfers can usually be quickly arranged with your broker over the phone. The applicant(s) may be subject to an affordability check (however, some high street lenders do not require this to be carried out with standard product transfers), in which they will complete an income and expenditure form. Once this has been completed and provided the credit check is approved (if applicable), the borrower will be provided with a product transfer document to sign. A handful of lenders may also require a re-evaluation of proof of income, but many do not.
Many lenders use property valuation software which return results very quickly, meaning that the whole process can potentially be completed in as little as a week.
What’s the difference between product transfers and remortgaging?
So, how do you know whether a remortgage or product transfer is best for you, and what’s the difference between the two?
As covered, a product transfer is typically a simple process involving switching from one mortgage product to another with your existing lender.
If on the other hand you decide that you want to borrow more money this would be classed as a “further advance” if you stay with your current lender, or a remortgage if you decided to move to a new lender at a different rate, for example.
When it comes to further advances (and any other other form of ‘non-standard’ product transfer, for example extending the terms of your mortgage), or remortgaging however, the process involved is more extensive. It will usually require a full mortgage valuation need to be carried out, there are the legal requirements to consider, as well as the usual credit checks and affordability assessments.
Need to know more?
Our team of mortgage experts are ready to help, get in contact today on 0330 1355914 to speak to an adviser or request a callback.