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How does remortgaging work?

This year the interest rate has fallen from 0.25% to 0.1%, which isn’t surprising news due to all the restrictions on COVID-19 and Lockdown.

This is an all-time low, so now, you’re thinking this could be a great time to Remortgage and take advantage of cheaper borrowing prices, right?

You may well have heard of Remortgaging but never fully understood what it all means, in fact Stephen Kerrigan explains all about Remortgaging here. To be brief, remortgaging is when you look to move from one mortgage deal to another, sticking to the same lender or finding a new one.

Taking out a mortgage is likely to be your largest financial commitment lasting you many years, but you don’t have to stay on the same mortgage as the one you initially took out, as this could mean your personal circumstances may change over the years, such as a change of job/career, redundancy, a loss of a partner, or even recently the coronavirus pandemic which has cause many people to consider saving more money to survive the financial crash.

It is very important to revaluate your finances every now and then, just as you did when you took out your first mortgage. Consider all your options in order to know you’ve got a remortgaging deal that is right for you at that moment in time.

Things to Consider about Remortgaging

Before you go ahead, you need to decide which mortgage is worth switching for. So, Stephen Kerrigan of MortgagesRM – Doncaster Fee Free Mortgage Advisor has listed a few things you should consider:

Check if your new lender is offering a Fee-Free mortgage, or if there is a product fee involved as this could counteract the savings you could have made by remortgaging.

There may be an early repayment charge on your current mortgage deal that you have to pay off before you can switch to a new deal. Again, this could outweigh the benefits of switching.

The lower your Loan-to-Value is, the more mortgage deals that may be available to you. For example, you can work out your LTV by dividing your outstanding mortgage balance by your property’s current value.

Everyone may take out a Remortgage for very different reasons, either for financial commitments or due to personal circumstances, but here are just a few examples listed below:

Why do most people Remortgage?

Taking Advantage of Low Interest Rates.

Your current deal is up for renewal

You want to move from an interest-only deal to repayment

You want to be on a better rate that you’re currently on

You want to be able to make overpayments

You want to borrow more money.

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The Final Steps of Remortgaging

The final steps of Remortgaging are pretty much the same as buying a House for the first time. Your new lender will carry out a credit check to confirm your current circumstances and arrange for your property to be valued. It is important that you get a solicitor or conveyancer to handle the transfer of your mortgage. Some lenders however, will offer this as a free service.

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