With the Bank of England base rate currently at an all-time low of 0.1%, many of us will be wondering whether we can take advantage of this and if it will reduce our mortgage repayments. To find out, we spoke to one of our expert mortgage advisers, Paula at Aro Mortgages to get the latest insights.
So, first things first, what actually is remortgaging?
“Remortgaging is simply when you replace your existing mortgage. You can either do this with your current lender, or you can check the market to see if you can find a cheaper deal elsewhere.”
Why might you want to remortgage?
“There are plenty of reasons why you might want to remortgage. The most common one is that your current mortgage deal is coming to an end. If you’re currently on a fixed rate mortgage, you’ll revert to your lender’s standard variable rate at the end of your mortgage period. This can cause an increase in your monthly repayments, so many homeowners choose to remortgage before this happens.
“You may also decide to remortgage if:
- You want a better rate.
- The value of your house has increased.
- You want to borrow more.
- You want to overpay, and you can’t on your current deal.
“Just remember, if you’re planning to remortgage early, check if there are any fees involved so you can weigh up whether you’ll benefit.”
When should you think about remortgaging?
“Remortgaging can take up to eight weeks, so it’s a good idea to get planning a few months in advance. You can usually secure a new mortgage deal three months in advance of your current arrangement ending without having to pay fees to switch. If you are due to remortgage, it’s always worth getting an appointment with an expert adviser to find your best rate rather than simply remortgaging with your current lender.”
How can I prepare to remortgage?
“If you know your current mortgage deal is coming to an end, check your credit report to ensure it’s as healthy as possible. Make sure that there are no errors on there that could negatively impact your score, and don’t make lots of credit applications just before you look to remortgage. Too many hard searches in a short space of time can temporarily reduce your score.
“If you’re a contractor or are self-employed, you’ll need to do a little more prep work. Some lenders will need to see evidence of two or three years’ worth of both business accounts and tax returns. If you have this information ready when you start looking, this can help speed up the process.”
Is now a good time to remortgage?
“With the base rate as low at it is, depending on when you took out your mortgage deal, you may find there are now much better rates available to you. So, if your current mortgage deal is coming to an end, this could be a perfect time to look for a low fixed rate deal.
“However, if your current mortgage isn’t coming to an end, you’ll want to check your lender’s terms. Some mortgages come with early repayment fees and exit fees (sometimes called a deeds release fee). Double check with your mortgage adviser if remortgaging early will actually save you money long term and if you can afford any potential upfront costs.
“There’s also the possibility that the value of your house has increased recently. You might find that this has given you a better loan-to-value ratio and that you can now find better rates than what you’re currently paying.
“If you’re not sure where to start with remortgaging or if you’ll benefit, get in touch with a mortgage adviser who will be able to give expert advice that’s tailored to you and take care of the whole remortgage process.”
If you’re looking to remortgage or you want to find out your remortgaging options, you can get in touch with our partner Cream Financial Solutions on 01902 297 714 and one of their expert advisers will be happy to help.
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