Why remortgage?

On behalf of Attwaters Jameson Hill posted in Residential Property on Friday, May 1st, 2020

Remortgaging, or switching to a new mortgage deal with either your current lender or a new provider, can be perceived as a time-consuming and daunting process by some. However, investing some time in shopping around for the best mortgage deal has the potential to pay off to the tune of thousands of pounds. And, having expert Residential Property solicitors on your side to liaise with your lender and answer any questions you may have, will undoubtedly make the process smoother and less stressful.

Below, we’ve outlined some of the most common reasons people decide to remortgage their property.

To avoid their lender’s Standard Variable Rate

After your fixed, tracker or discount rate mortgage deal comes to an end, you will usually be automatically switched onto your lender’s Standard Variable Rate (SVR). When on the SVR, your mortgage repayments will fluctuate according to this rate. While SVRs are usually loosely modelled on the Bank of England base rate, lenders aren’t bound to strictly adhere to it and can increase their rate as they see fit.

In fact, data shows that remortgaging to another deal before your current one ends could save you an average £4,500 per year compared with your lender’s SVR[1].

To get a better rate

Even if your mortgage deal hasn’t yet come to an end, there could be better rates out there, so it’s worth shopping around. Just check you won’t incur hefty early repayment fees for leaving your current deal before its time is up.

To find a more flexible deal

You might feel that your current deal doesn’t offer you enough flexibility. For example, if your financial circumstances have improved and you are now in a position to overpay on your mortgage, your current deal may not allow you to pay more, or your lender may charge you for doing so. If you want more flexibility, then, you’ll need to remortgage.

To borrow more

Some people decide to remortgage in order to borrow extra funds on low rates, usually for a significant project like an extension to their home or a new kitchen. Some also decide to consolidate their debts, using the extra money to pay off their existing debts so that they just have their mortgage left.

Your property’s value has significantly increased

If your home’s value has recently shot up, you might benefit from a better loan to value (LTV). This refers to the amount left on your loan as a percentage of your property’s current value. A lower LTV may mean lenders will be willing to lend you more, on lower interest rates, so remortgaging could make sense.

And where does my solicitor come in?

Particularly when you’re remortgaging with a new lender, you’ll need a solicitor to take care of the legal aspect. Although some lenders offer their own solicitor, they will not be able to undertake extra tasks such as adding or removing somebody from your mortgage, while hiring your own solicitor will ensure your interests are protected.

Your solicitor will deal with ID checks, local authority and other searches, your remortgage offer, leasehold checks and any other steps involved in securing your new deal. Having a Residential Property solicitor on hand during the process is vital, because they know exactly what they’re looking for and can raise any issues within the remortgage contract that could be problematic. Once the deal is done, they’ll receive the loan from your new lender and pay off your previous provider – remortgage completed!


[1] https://www.homesandproperty.co.uk/mortgages/how-to-remortgage-mortgage-rates-savings-standard-variable-rate-fixed-rate-remortgage-a128426.html

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