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The Difficulties of Remortgaging

What is remortgaging?

Remortgaging is the act of moving your loan from one lender to another or negotiating a new rate with your existing lender. You might be able to find a cheaper deal elsewhere, letting you save a bit more each month and pay it off faster. Or you could extend the length of your mortgage, allowing you to pay less each month (but taking longer to pay off completely and paying more interest over the length of your mortgage).

So if you’re looking to pay off other debts*, shorten the length of your mortgage or simply reduce how much you’re paying, you may want to consider remortgaging your home.

The process of remortgaging is fairly simple, but figuring out whether it’s the right financial decision isn’t. We do recommend speaking to a financial adviser further before making a final decision.

Why you may consider remortgaging:

• The value of your property has increased (significantly) since you took out your mortgage, putting you in a lower ‘loan-to-value’ band that opens you up to lower rates.

• Your existing lender won’t allow you to pay more towards your mortgage, even when you can afford it.

• Your existing deal is coming to an end and your lender will place you on an SVR (standard variable rate).

• The Bank of England rate is going to increase, as this can affect your mortgage.

Why you may consider staying with your current lender:

• You’ve suffered credit issues or failed to pay debts (since starting your mortgage).

• If an early repayment charge payable on an existing product exceeds the cost of any savings that could be made by remortgaging.

• You’ve only got a small amount left to pay; switching lenders so late on in the process means you may not save that much.

• Your work situation has changed; perhaps you’re now self-employed or no longer working. This could affect a lender’s decision either way.

What to do when deciding to remortgage

Do your research

Comparison sites are handy for finding current deals, but they don’t always explain in certain terms what’s right for you and your particular circumstances. If you are unsure, we suggest consulting with a mortgage adviser who can make the process as easy as possible and find the right rate for you.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.