What to consider when re-mortgaging

by Charleston Financial

Important factors to consider when re-mortgaging your home

Re-mortgaging your home or your buy to let property is when you move from one lender to another to provide the mortgage funding for your property.

This generally happens when your fixed deal term is coming to an end, and you need to find a cheaper deal in the market.

If you are unable to change the mortgage product with the same lender (product switch) or re-mortgage with a new lender in time, you will automatically revert to your current lender's  Standard Variable Rate (SVR) which is generally priced higher than new deals in the market.

Our mortgage advisers have access to the whole of the market, meaning we are able to find mortgage deals most suitable and cost-effective to your individual circumstances.

There are many factors to be considered when selecting a suitable lender such as income-based loan affordability, existing credit commitments, and other lending criteria, in addition to your own personal needs a demands.

When to start a re-mortgage application?

You should start searching for re-mortgage options with the help of a mortgage adviser, at least three months before your current fixed deal term-ends. It gives enough time to check the lending criteria and other affordability requirements before submitting a mortgage application to a new lender.

It is important to consider the application processing time taken by the lender and the solicitor’s turn-around time. As you are moving your mortgage to a new lender, a solicitor would be involved in the legal process. Most of our mortgage lenders provide free legal services as part of the mortgage package which could save you hundreds of pounds.

It is important to leave plenty of time to get the mortgage in place so that both the lender and the solicitor have time to assess, and complete the mortgage before your existing deal comes to an end. This is why it is ideal to start the re-mortgage process at least three months before the current fixed term deal ends.

The good news when looking to get a new mortgage is that most mortgage offers are valid for 6 months so this generally provides plenty of time to achieve a new mortgage in time.

Using a mortgage adviser VS a comparison site

On top of finding the most suitable re-mortgage option, a mortgage adviser will take care of all the arrangements required to ensure a timely completion of the mortgage. Our goal is to reduce the stress, and time that our customers have to commit into arranging the finance, as without using a mortgage adviser, it is easy to make mistakes, become overwhelmed, and not meet criteria, we make the process stress free and as streamlined as possible.

Furthermore, we will always check the interest rate changes in the market and if there is a lower rate available from the same or another lender, they would always inform you.

Personal mortgage needs are unique to individual circumstances, and comparisons based on affordability, portability of the new mortgage and many other factors that need to be considered, cannot achieved via an online comparison site. With the experience of a Charleston “whole of market” residential mortgage adviser, we can assess not just the lower interest rates in the market, but also the associated fees, the Standard Variable Rate (SVR) end rate and the early settlement charges applicable, to enables us to present the best available products that match your needs and demands.

Do I get credit-checked when applying for a re-mortgage?

Most lenders will run a "hard" credit check on your file at the point of full application submission, however, some lenders will provide a “soft search” approach when getting the initial agreement in principle, soft searches do not affect your credit score

Another factor of using a qualified mortgage adviser, is that your circumstances will be assessed against criteria before searches are carried out, ensuring that your credit profile is not adversely affected by multiple hard searches, as this can affect your ability to obtain finance in the short term.

Why you might choose to re-mortgage:

There are three main reasons why you might choose to re-mortgage:

  • To get a better mortgage rate
  • To consolidate existing debts
  • To raise funds for any other purpose

To get a better deal

It can be worth re-mortgaging to take advantage of better interest rates. Often, when an initial deal period comes to an end, your lender moves your mortgage to their Standard Variable Rate (SVR), or offers you a product switch. Whilst this may seem the "easiest" option to you, it may not be the best option. Your existing lender only offers you deals from their own products, not the rest of the mortgage market and so without assessing the rest of the market, or taking your personal needs and demand in to account, it is impossible to know whether it is the best deal available to you at the time.   

By speaking to a mortgage adviser, you can secure a better rate, reduce your monthly repayments, and reduce the amount you pay over the life of your mortgage. 

To consolidate debts

You can sometimes use a mortgage to consolidate other debts such as car loans or credit cards and thus reduce your monthly outgoings. You should seek specialist advice if you are intending to consolidate debt, as whilst the headline reduction in the monthly payments may look attractive, it is also very important to consider any additional interest you may end up paying by extending short term debts on to a long term mortgage.

Capital raising

You can re-mortgage to raise money for almost any purpose including home improvements such as an extension or a new kitchen. You can also raise money for other purposes, such as your child's university costs. Furthermore, some lenders will allow you to raise extra cash to purchase buy to let properties in the future.

Our mortgage advisers will  help you find a lender for your capital raise purpose. One common factor associated with re-mortgage with extra cash would be the maximum loan to value.

If you have any questions regarding this article, or would like to speak to one of our whole of market mortgage advisers, then please contact us on 1908972491.

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