Many people consider remortgaging their house for a range of reasons, from paying for home improvements such as an extension, to buying the car of their dreams or simply to find a better monthly repayment rate.
We’ve made it easy to understand how remortgaging works because, despite being a generally more simple process than getting your initial mortgage, remortgaging can pose a different set of hurdles.Find your buddy
How does remortgaging work- What you need to know
If you’re paying to get a better rate, it’s always worth checking that this is definitely an option, we can help with that! When you’re thinking about remortgaging, there are some things you need to establish before you apply.
- Your Loan to value (LTV), which is the percentage of the total value of the house you’re looking to borrow, this is usually around 80-90%. Learn how to calculate your LTV here.
- Can you afford to remortgage? Based on your LTV and combined household income, can you afford to borrow the amount you’d like to?
What are the types of remortgage available?
Once you’ve decided if you should/can afford to remortgage, the important thing is getting the best rate that suits you, your family, and your situation. There are two kinds of remortgage:
- How Fixed-rate remortgages work
- Your lender will give you a fixed rate for a short term (usually anything up to 10 years). Some people prefer a fixed-rate remortgage because they can be certain about how much they’ll need to pay each month which allows them to plan for the future more accurately.
- How Tracker remortgages work
- Interest rates on tracker mortgages change depending on the Bank of England’s interest rate, as with standard mortgages. You may end up saving if interest rates drop, which is why some people prefer this option, however might end up paying more if interest rates go up, so taking a tracker mortgage can be risky.
Depending on your financial and social situations, either of these methods could be the way to go, if you’d like help figuring out which is best and have each type of remortgage explained in more detail, fill out our contact form and we can come back with some advice and a quote. There are some drawbacks to remortgaging, some of which are explained below, so it’s important that we guide you through the process to make sure it’s right for you.
The Cost of remortgaging explained.
For many, the main reason to remortgage is to save money on their existing rate. While this can be a very good idea if your financial situation has changed since getting your initial mortgage, there are fees to watch out for when calculating whether it will be beneficial, so before you delve into a remortgage application, consider whether it will be really beneficial to your current financial situation. We can help you figure out how much you’ll be paying, and our specialist advisors can give you a quote on the rate that will suit you best. For more information on how remortgaging works in terms of cost, click here. If you find that the benefits outweigh the drawbacks in your situation, then we’re on hand to help you find the best deal for you.
Disclaimer: As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.