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When Should I Start Looking To Remortgage?

June 1, 2021
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When Should I Start Looking To Remortgage?

With interest rates at an all-time low, you might be wondering if you could get a better deal on your mortgage. The Bank of England base rate fell from 0.25% to 0.1%, so now could be a great time to remortgage to save money.

Many people wonder, should I remortgage or should I stay put with my current deal? There are advantages and disadvantages to both approaches, so let’s explore the topic in more detail.

These are some of the most common reasons you might consider remortgaging your property:

  • To secure a better rate
  • To avoid a standard variable rate
  • To move from interest-only to repayment
  • To be able to make overpayments
  • To borrow more money

Every situation is different and will need careful consideration. Since remortgaging carries a similar amount of paperwork as your original mortgage application, it isn’t a decision to be taken lightly. If you simply want to change your lending product and stay with the same lender, a product transfer might be more appropriate.

Your budget and needs might change over the lifetime of your mortgage. It’s rare to stay on the same mortgage for the full term, and shopping around for a better deal is very common.

When Should I Start Remortgage Process?

There are so many reasons to consider remortgaging, from releasing equity from your home to changing your monthly payments. These are some of the most common reasons we see customers looking for remortgage support:

Looking for a better rate

When interest rates fall, lenders often respond by offering mortgages with lower rates. These aren’t only available to new customers looking for a new mortgage, you could move your mortgage to a new lender and make the most of these offers. If you’re still in the middle of a fixed-term mortgage, you may have early repayment charges, so bear this in mind when you are calculating the potential savings. See these comparisons.

Your fixed-rate deal has come to an end

It’s common to sign up for a fixed-rate mortgage for 2, 3 or even 5 years. This helps to guarantee your mortgage payments every month to make it easier to budget. Once this term comes to an end, it makes sense to consider your options and see if you can find a better deal. At the end of your term, your lender will switch you on to a standard variable rate, which can go up or down every month. If you want the same mortgage payments every month, you should remortgage to a fixed-term deal.

You want to move to a repayment mortgage

If you decide you want to switch from an interest-only to a repayment mortgage, you may need to remortgage. This type of product change can often be handled as a product transfer if you stay with the same lender, but you can also shop around to try to find a better deal.

You want to make overpayments

Some lenders don’t allow overpayments, so you may need to switch if you find yourself in a position to make additional payments on your mortgage. Overpayments will help you to clear the balance earlier, and this will reduce the amount of interest you pay. Since this changes your interest liability, there may be an early repayment charge, but switching to a different mortgage can remove this.

You want to borrow more money

When you have built up equity in your home and the home increases in value, you can remortgage to borrow more money by remortgaging. Rather than move home and take on a new mortgage, you could stay put and make changes to your existing property to make it more suitable for your needs.

Releasing equity from your home could also be useful if you need to buy a partner out of your mortgage, if you need to pay off a large debt, or if you simply want to release some of the funds.

Remortgaging and borrowing more money will either increase the time it takes to repay your mortgage or make your monthly repayments higher. This method can also increase the amount of interest you pay. However, this method can be more effective than taking out a personal loan.

Bear in mind that the lender will want to know what you are using the money for, so be prepared for some additional questions.

Will I pay more if I remortgage?

This depends on the type of mortgage you switch to, if you are planning to increase your repayment term, and if you are planning to borrow more money. There are also costs associated with remortgaging that you need to take into consideration.

As you near the end of your mortgage term, your remortgage will require a much lower LTV, which can mean you can take advantage of the best rates available. By weighing up the cost of switching over the benefits of saving on interest payments, you could secure a great deal by remortgaging at the right time.

Do I have to remortgage?

You don’t have to move your mortgage if you don’t want to. If your finances are fairly secure, you could move to a standard variable rate and take advantage of the lower interest rates. Just remember that interest rates could go up at any time, and this could leave you with much higher payments.

Another option available to you is a product transfer. This will allow you to switch products with the same lender and avoid a lot of paperwork. Product transfers are ideal if you can find a good deal with the same lender, as they can be completed over the phone and finalised in as little as four weeks.

Need help navigating your remortgage? Get in touch with our remortgage team today. We can help you find the best possible deal, no matter your situation.

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Niche Mortgage Info is a guidance website and introducer and is not regulated by the FCA. All of the advisers we partner with work only for firms who are authorised and regulated by the FCA and specialise in a number of different fields. They will offer any advice specific to you and your needs. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice.

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