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Remortgaging can yield many benefits, such as reducing your current monthly mortgage payments at a lower interest rate. Just like you might shop around for the best energy rates, you could also potentially be saving money on your mortgage.
It is important to understand whether remortgaging is right for your situation and any other details that come with it. Do I need a solicitor? Do you pay stamp duty on a remortgage? In this article, we will answer these questions and more.
Simply put, remortgaging transfers you from one mortgage deal to another by paying off your previous mortgage lender with the proceeds from a new one.
Your mortgage is a commitment that will last years. During this time, your financial needs may change, and it is important to take advantage of a mortgage plan that is suitable for you.find me a mortgage
There are various reasons why you might consider remortgaging. You can potentially save money if you find a new mortgage plan with lower interest rates. However, you should consider any exit fees or charges that may incur when switching. A lender will often ask you to pay an early repayment charge before your mortgage can be switched. It’s important you work out exactly how much you’d be saving on the lower interest rates taking into account these charges. There would be little point in switching your mortgage plan to pay marginally lower rates if you foot the bill for the difference in exit fees anyway.
Another reason you may consider a switch is because your current plan is up for renewal. Once your fixed initial term is over, and you are liable to pay the standard variable rate (SVR) of interest, you could be paying more than you were previously.
Your financial standing can change at any point over the course of your mortgage plan. If you are now earning more, you may want to pay more into your plan to pay it off sooner. If your current lender doesn’t allow you to make the payments that suit your changing financial stance, you may wish to consider a new lender.
Some people remortgage because they want to borrow more money in order to make home improvements. This can be more time and cost-effective than moving home. It is important to assess what mortgage deals are available for you and whether or not a home loan would be more viable.
If you’re on a mortgage plan that is interest-only, you may wish to move to repayment. It is more likely that your current lender can make this change for you in your current plan; otherwise, you may consider a remortgage.
You do not pay stamp duty on a remortgage unless you are transferring the legal title of the property in the remortgaging plan. The person the property is being legally transferred to may be liable to pay this, but this is dependent on the circumstances. Need to know how much you’ll pay on Stamp Duty? Use our calculator to find out.
A solicitor is required when there is legal work involved. If you choose to remortgage with a new lender, you will need a conveyancing solicitor to benefit both you and the lender. If you are remortgaging with the same lender, you will not need a solicitor if you are simply moving to a new plan. Additionally, you will not require a solicitor if you are simply just getting an advance with your current lender.
Even if you might benefit from better mortgage rates, some factors of your current standing may mean it is better to stay put. It is important to weigh up all factors before making a switch.
The smaller your mortgage debt, the less likely you will benefit from changing your plan (or even be able to). The fees incurred from switching lenders, such as early repayment charges and exit fees, may render the savings on interest rate obsolete if your loan was small to begin with. Some lenders may refuse to take on your mortgage if it falls under a certain amount.
If your home has decreased in value, this may sway a remortgaging plan. House value decline after mortgaging can put you in negative equity. Lenders are less likely to approve a remortgage if they need to lend you more than the home is worth. Similarly, a remortgage is less viable when you have little equity. The more value of your property you need to borrow, the less likely you will be able to find better rates to switch to.
If your credit has been impacted since taking out your current mortgage, this will definitely affect your ability to remortgage. Lenders will require extensive knowledge about your financial stance before they will consider lending to you, and are less likely to take on your mortgage if you have bad credit history. Read our post here to find out more about improving your credit score.
An obvious reason to stay within your current mortgage plan is if your rates are good compared with others available to you. Unless you have another reason to remortgage, there is no need to make the switch if it won’t save you money. However, this may not always be the case if your rates change, or if alternative mortgage deals offer lower rates than before. It is important to routinely assess options available to you.
If you are considering remortgaging or need advice, don’t hesitate to contact our team today. We will provide you with all the information you need to help you decide if remortgaging can benefit you.Contact Us
Always remember that a mortgage is secured against your property. If you fail to keep up repayments, it may be repossessed.