There is always an argument for and against remortgaging and it should take careful thought. We have put together a list of the pros and cons of remortgaging, but we advise that you should always speak to an independent mortgage advisor who can help you make the decision
Reasons to remortgage
The possibility of a better rate
It is worth reviewing how your mortgage compares with different lenders. It could be that you are now paying more than you need to, so a regular review may result in significant cost savings by re-mortgaging to a different lender.
You may have to pay an early repayment charge and an exit fee which can be huge. But the long-term savings can outweigh the initial costs of remortgaging. Make sure you do the sums before you go for it.
My current deal is about to end
When your mortgage deal comes to an end, your lender will put you on a standard variable rate. This is most likely to be higher than your original rate, so it is worth researching around three months before your mortgage comes to an end.
My property has increased in value
It could be the case that your property’s value has gone up quite quickly. You may find that you are eligible for much lower rates if you are now in a lower loan-to-value band.
If this is the case, it certainly is worth speaking to a mortgage adviser who can help you take the next steps.
I want to pay more off, but my lender won’t let me
If you come into a large sum of money, such as inheritance or a significant pay rise, you may want to overpay. Some mortgage deals won’t allow you to pay any more off, or they may only allow you to make a small overpayment.
By remortgaging, you will be able to reduce the loan size and possibly get a cheaper rate. Again, look out for early repayment charges or exit fees.
I want to borrow more
If you want to borrow more money, it’s not always the case that your current lender will allow it. A different lender may let you raise money cheaply on low rates, but there will be early repayment fees on your existing mortgage – so work out if it’s actually worth it against other forms of borrowing.
I need more flexibility
Even though a mortgage is a long-term commitment, life does take unexpected twists. It doesn’t necessarily mean that you have to default on your repayments.
It can be the case that you are planning on changing jobs, or perhaps going back into education, whatever your plans, there are causes to allow for more flexibility.
Remortgaging may help you find a mortgage that can be a little more flexible, allowing for missing a payment. But these caveats rarely come for free. If you are wanting a flexible mortgage, it is most likely that your interest rates will increase.
Reasons not to remortgage
My debt is really small
It may not be worth switching lenders if your loan is below £25000 because you are probably not going to make any saving. Many lenders won’t even take on low mortgages.
Even with a smaller mortgage it is usually worth looking at remortgaging as most remortgage products come with Free Solicitors or Cash Back to pay towards them and a free valuation. It often won’t cost you anything to remortgage and you may get a more competitive rate. Make sure you seek out advice from a remortgage expert before you do.
My circumstances have changed
If your financial position has changed significantly since you took on your mortgage, especially if it was before 2014, lenders now must see evidence of your income. This may not have been the case when you took on the mortgage.
You might not fit the essential criteria for lenders to offer you a loan now. So, you will have to stay put.
In this instance it may be best to stay with your current lender and do a product transfer however our advisors will always look at this option for you.
My property’s value has decreased
If you are now in negative equity, the only thing you can do is stay where you are. If your debt is higher than the value of the property, you may want to see if you can start making overpayments – so long as your lender won’t charge you for doing so.
It’s best to speak to a mortgage adviser to see if there are likely to be any further options open to you.
I’ve had credit problems since taking out my mortgage
It’s probably the case that lenders are lot stricter than they were when you first applied for a mortgage. If you are thinking about remortgaging, take a careful look at your credit history since taking on your loan. Even if you’ve only missed one credit card repayment or mobile phone bill, lenders will be looking more closely than before – any smudge on your history may scupper your chances of remortgaging.
However with the comprehensive panel of lenders we have access to it is always worth looking further into with an advisor as this is not always a stumbling point.
There are many more things to think about when it comes to remortgaging. It is always best to speak to an independent adviser who can help you decide if it will be beneficial.