Check the terms and conditions of your existing mortgage so you're aware of any potential costs. For example, an early exit fee. And check that remortaging is actually the best option. You could have more equity by staying with your current mortgage provider and paying off the debt. The decision to remortgage ultimately rests on one main thing: will you save money with a new mortgage?
To work that out, you need to calculate what fees if any you will need to pay to exit your current mortgage and any fees for taking out a new one. If you remortgage to a new mortgage with a lower interest rate you could pay less money overall or at least until the next time you remortgage , and your monthly repayments will be lower.
But if you were to remortgage to a 5 year fixed rate mortgage at 2. If you feel you're paying more than you need to, it can be tempting to start looking at remortgage deals straight away.
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But it's important to first understand how remortgages work to make sure it's the right option for you. If you try to exit your mortgage during the special introductory promotion i. The ERC is usually calculated as a percentage of what you owe, so it could be tens of thousands of pounds.
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However, the rates will probably be a lot higher than the interest rate you previously enjoyed. For this reason, it is usually worth trying to remortgage before your promotional term finishes. Mortgage offers usually last for between three to six months and can take a month or two to come through. Getting a remortgage usually takes between one to two months, though it can take longer if there are any complications, such as if your application is rejected. If you get a new deal with your current lender, the remortgage process is likely to be faster than if you decide to change to a new lender, but it will still need to do a deep dive into your finances to be sure you can comfortably meet the payments.
In general, you should begin the remortgage process at least two months before your current promotional term ends. Most mortgage offers are valid for a few months. Even if you already own your property outright or you're looking to remortgage with the same lender. The lender needs to be satisfied with your credit history and the affordability of the new mortgage.
Your income and all your outgoings including other lines of credit will need to be assessed before your remortgage is approved. For the same reason, it is best to try and avoid applying for multiple remortgages at the same time — it can be expensive if there are up-front fees, and you could end up with a few hits on your credit record, which could further decrease the chance of being accepted for a remortgage.
No matter what mortgage you currently have, you're likely to be to find a remortgage deal out there. But depending on your financial situation, or the type of mortgage you have, it might be a little tricker.
If you don't ask … the secret remortgage rates for special customers
You're still able to remortgage with a poor credit rating. But it might not be your best option. If your financial circumstances have changed since your first mortgage application, you could end up with a worse rate. It's probably best to wait until your credit score has improved to get a better rate. If you're looking to increase your share, it's possible to get a remortgage on your shared ownership property.
It's not much different from a standard remortgage. Though as it's a shared ownership property, you'll need to find a lender who offers shared ownership mortgages. This could limit the options available to you. It's possible to get a remortgage on your Help to Buy property. If you have a Help to Buy equity loan , you might want to remortgage your current property to exit the scheme. By remortgaging, you could increase your borrowing to repay the equity loan in full.
Or you might want to remortage your Help to Buy property if your fixed rate period is coming to end. By doing so, you could avoid being moved to your lender's potentially more expensive standard variable rate. But not many lenders offer a Help to Buy remortgage deal.
And many require you to pay off your equity loan in full first. So your options may be limited.
Fee-free and low fee mortgages
One of the most important factors when getting any mortgage is the the loan-to-value LTV ratio. A first time buyer is unlikely to have a giant deposit. If you have positive equity in your home, you will not need a deposit for a remortgage but can use that equity in its place. Edited by: Sarah Guershon. Did you find this useful? Last updated: 8 August, The consensus is that there will be no dramatic sudden interest rate increases. However, these forecasts are no guarantee that rates won't rise and when rates do rise trackers will get more expensive. Borrowers needing security should consider the extra cost of a fix as worthwhile.
If you are taking a tracker because you couldn't afford the equivalent fixed rate then you are putting yourself in a very dangerous position. If you decide to take a fix you need to carefully consider how long for. Two-year deals are cheap but only offer very short-term security and incur extra costs when you remortgage. Five-year deals lock you in for longer and come with slightly higher rates but better security and no need to remortgage in a relatively short space of time.
Should I take a tracker rate? Tracker rates are essentially a gamble. What looks like a bargain rate now, could soon get very expensive when interest rates rise. Anyone considering a tracker needs to make sure they are not just storing up a problem for the future. If the tracker comes with an early redemption penalty that would make it expensive to jump ship, then make sure your finances could take a rise of at least 2 per cent to 3 per cent in interest rates.
For that reason we at This is Money like tracker deals that fit into one of these three categories: no early redemption penalties, a cap to how high the rate will go, or that let you jump ship for a fixed rate if rates rise. Should I get off a standard variable rate? Standard variable rates are what borrowers slip onto by default when they finish a fixed or tracker deal period.
They can typically be changed by lenders at any time - without the Bank of England moving rates, they may also rise or fall by more than any move in base rate. A number of mortgage borrowers have fallen victim to lenders hiking their standard variable rates in recent years, despite the base rate remaining stable.
Never forget that without a Nationwide-style base rate lock guarantee, your SVR could be hiked at any time, as could a discount rate linked to it. Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use.
A guide to remortgaging your home
We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence. The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline. How we can help Contact us. Steve Webb replies It's time for the government to offer the growing population of freelancers more protection, says flexible working entrepreneur Is time about to be called on the dividend party? What next for mortgage rates? About what next for mortgage rates?
Poll How long would you fix your mortgage for? Two years. Five years. Ten years. Don't take a tracker. How long would you fix your mortgage for? Two years votes Five years votes Ten years votes Don't take a tracker votes Now share your opinion. Compare true mortgage costs Work out mortgage costs and check what the real best deal taking into account rates and fees. Find the best mortgage for you Check the rates you could apply for. What decides mortgage rates?
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