Remortgaging – Frequently Asked Questions
Why should I remortgage?
Most people who remortgage do so to reduce the interest rate they pay on their mortgage, meaning that their monthly repayments will be lower. Mortgages often come with an introductory rate which can last for anywhere from one to five years.
When your fixed-rate deal ends, your lender automatically moves your mortgage to their Standard Variable Rate, which as the name suggests can vary, rising and falling in line with the Bank of England base rate. The rate you will be charged will typically be 2% over base rate (currently 0.75%). With the mortgage market remaining competitive, there are many deals currently available that might be more cost-efficient.
When should I think about remortgaging?
Generally, the best advice is to avoid remortgaging before your current deal ends as you are likely to incur early repayment fees. However, you can start to look for an alternative mortgage around three months before your current deal finishes.
What is an Agreement in Principle?
This is a statement from a lender saying that in theory they are prepared to lend you the mortgage money you need; it’s generally valid for up to three months. It’s important to note that it’s offered in principle and so isn’t guaranteed. To obtain a formal mortgage agreement, you will need to complete your lender’s application process and have your application approved and confirmed.
How long does remortgaging generally take?
This is often the first question that we are asked, and the answer will depend on individual circumstances. However, it usually takes between four and six weeks. It can take longer if there are complications, but we will always keep you updated on progress.
What happens on completion?
Once the date has been finalised, we will prepare a completion statement and obtain an up-to-date redemption figure for your existing mortgage. We will request the mortgage funds from your new lender, repay your existing mortgage, and confirm to you that completion has taken place.
We then register the new mortgage at the Land Registry, and send the title deeds to the new lender if required.
When should I stop my direct debits for my current mortgage?
We will advise you when your remortgage is about to complete, and confirm when you can cancel the direct debits on your old mortgage. Under the terms of your mortgage, you will have agreed to pay up until redemption date. The redemption figure which we use in our completion statement will take account of payments which are due up to that date. If for any reason there has been an overpayment, this will be repaid following completion.