For many people, their mortgage is the biggest single expenditure they are faced with. So, when it comes to cutting costs and saving money, this seems like a pretty good place to start – right? After all, you shop around before making far smaller investments, so why overlook your mortgage?
Many people are surprised to learn that re-mortgaging can be relatively simple and straight-forward, and can help you to save a substantial amount of money on your mortgage each year.
What exactly is re-mortgaging?
Re-mortgaging is the process of moving your mortgage from one lender to another in order to secure yourself a better deal and, in the long run, save yourself money. And you don’t even have to move lenders – you might be able to negotiate a new offer with your existing lender, which will involve less fees than if you move elsewhere.
Why do people re-mortgage?
As well as making substantial savings, there are a whole host of reasons why people choose to re-mortgage. These include:
- Your terms aren’t right for you any more – maybe you’re in a position to make extra payments but your current deal won’t allow you to? Or maybe you need to take a payment holiday but that isn’t permitted with your current mortgage?
- You took out an endowment mortgage and now won’t be able to pay the balance back at maturity
- You want to borrow more
Is re-mortgaging suitable for everyone?
No, as with any financial product or decision, re-mortgaging isn’t suitable for everyone and you need to carefully look into your options before making any decisions.
If any of the following apply to you, you should be particularly cautious when contemplating remortgaging:
- You’re already on a great deal
- You’re locked into your current deal with penalties
- You own less than 10% of your property outright
- Your equity has shrunk
- Your circumstances have changed – for example, your income has reduced significantly or you’ve stopped working altogether
- You have poor credit history
- You have a very small mortgage or your mortgage is coming towards its natural end
Before you begin…
If you’re considering re-mortgaging, there are a number of factors you need to check in regard to your current mortgage before you begin.
- Will you incur an early repayment charge?
Many mortgages feature an early repayment charge, especially during any initial special discount period. If you remortgage during this time, you will incur the charge, which can run into thousands of pounds.
So, before you pursue re-mortgaging, you need to check whether there will be a charge, how much it will be, and what date it applies until.
- Will you incur a deeds release fee?
Mortgages often include an administration fee for releasing the property’s deeds to your solicitor. If applicable, the fee can vary from £50 – £200.
- How much do you owe your current mortgage provider?
Rather than estimating how much you owe, you should actively call your mortgage provider and ask them to confirm how much you would need to pay in total to clear your mortgage on a specific date. This will take into account the balance as well as any fees and charges you will be expected to pay. Get in touch with us today and we will put you through to an Ayr mortgage advisor.