For most people, their mortgage is their biggest financial commitment. And it follows that streamlining the largest debt can produce the largest saving. We have discussed re-mortgaging in the past, but with the market constantly changing it is worth a reminder of what you should have in mind when considering if it is for you. So, here are some dos and don’ts for re-mortgaging.
DO allow enough time: Start discussing options with your mortgage adviser at least a few months in advance of when you plan to re-mortgage your property. It pays to line up and apply for your new deal no less than three months before your current deal ends. This means your advisor has time to look for the best deal for your circumstances and safeguards against rolling onto a more expensive standard variable rate at the end of your mortgage term.
DO get your paperwork in place: The process of re-mortgaging is very similar to a new mortgage. This means that there can be a lot of paperwork. You will need ID, proof of address, proof of income and bank statements. It’s worth keeping all your documentation in a safe and easily accessible place when the time comes to start filling out forms.
DON’T take the easy option and stay with your existing lender: Unlike simply swapping to a different mortgage rate with the same lender, re-mortgaging opens options with new lenders. If for example you have a different household income compared to when your mortgage was initially arranged five years ago, you may find that you are able to increase your borrowing power. You may choose to release capital for several different reasons, while securing yourself a more competitive rate than is available from your existing lender.
DON’T try and guess your property’s value: You will need an accurate valuation to know how much you can spend or save with your new mortgage. A current valuation is also important if you want to release any equity. One of the measures for affordability is the loan-to-value figure. The lower this is the less risky you are to a mortgage lender affecting your interest rate and the amount they will lend.
Many people assume that a re-mortgage is as simple as choosing a new rate, but this isn’t the case and it’s worth talking to a mortgage advisor. Re-mortgaging is a good way to review and reorganise your finances and you could be making greater short-term or long-term savings. , I am happy to review your specific circumstances please get in touch if you need advice.