Remortgage deals

Timing is the key to maximising the benefits of remortgaging, but the best time to remortgage will depend on your individual circumstances.

For example, if you're coming to the end of your current fixed-rate deal or variable rate introductory deal period - you can set up a remortgage as far as six months in advance of the end date.

On the other hand, if your financial circumstances have changed for the worse, it could be difficult to qualify for a remortgage. This is especially in the current climate, when remortgage rates have risen dramatically and people are struggling to meet affordability requirements to remortgage.

The Mortgage Charter could help you in the short term if you're trapped on a high SVR and unable to remortgage.

Remortgage comparisons can be difficult to manage alone, due to the high volume of deals available. Not to mention the fact the every lender has a different set of criteria that you will need to meet. Rates are also changing incredibly quickly in the current market, so deals seen online are not always available by the time you apply.

Mortgage brokers with access to the whole market, like those at Mojo, know which lenders can offer the best remortgage rates for your circumstances. They also have access to deals you won't necessarily see online.

Yes, you can, so long as you are able to meet the criteria.

The process tends to be lengthier than transferring to a new deal with your current lender (a product transfer). Providers sometimes offer better deals to existing customers, but you could save more by remortgaging with a different lender, so it’s worth comparing all the deals available.

If you’re still locked into a mortgage deal, it’s likely you’ll have to pay an early repayment charge (ERC). An ERC is a penalty for leaving your existing mortgage deal early. It’s usually calculated as a percentage of the amount borrowed, which tends to decrease the closer to the end of the deal you get.

Paying an ERC to remortgage before your fixed-rate period comes to an end could take any savings you would make. So make sure you calculate the costs carefully to decide whether it's worth it for you.

Most lenders won’t need you to remortgage in order to change from an interest-only to a capital repayment mortgage deal with them. In fact, they will usually be happy for you to do this, as it reduces the risk to them.

If you wanted to change from a repayment to an interest-only mortgage your options would be reduced, as not all lenders are happy to offer interest-only mortgages for residential homes. However, you may be able to do so as a temporary option under the mortgage charter.

Remortgaging usually takes about a month, which is the time you need to complete all the paperwork and have a valuation carried out on your home. When the process is over, you’ll be notified with a completion statement from your lender.

If you choose to remortgage with the same lender, this is known as a product transfer. Because the lender already has all your details, product transfers tend to be quicker than remortgaging with a new lender. Some lenders offer digital product transfers which can be completed online very quickly.

Mortgage lenders carry out a credit check at mortgage application to decide whether to lend to you. If this is a ‘hard search’, which it typically will be at application stage, it leaves a mark on your credit score temporarily, but this shouldn’t affect it too much.

The real problem is where you make multiple applications to a number of lenders before being accepted. This makes it obvious that you have been declined by others, but also gives the appearance of desperation, which can discourage future lenders from approving your remortgage application.

The best way to avoid this is to speak to a broker who will be able to direct you to those lenders whose criteria you are most likely to meet. 

Yes, you can. This will typically be easier if you had the same circumstances when you took out your original mortgage, or have been self-employed for a substantial period of time, however.

Self employed mortgage applicants will usually need to demonstrate a lengthier period of stable income than employed applicants, with two to three years of accounts and tax calculations the standard requirement. There are a few lenders who will look at self-employed applicants with as little as 12 months trading history, however.

Yes, it’s certainly possible, depending on the level of your credit issue. There are bad credit lenders specifically intended to help people in these circumstances, although the remortgage rates tend to be higher.

If you’re concerned about your credit score, another option is to consider a product transfer. Your existing lender is unlikely to check your credit rating or affordability unless you’re increasing your loan amount or extending the term of your mortgage, so a product transfer can be an easier option. 

If you remortgage with a new lender, you will need to have a property valuation. Much like you did when you took out the original mortgage.

If you use a product transfer to remortgage with your current lender, you won’t usually need to have a valuation, however, you may need to if your house has changed significantly in value.

Lenders have a maximum LTV that they are willing to offer in any given scenario, depending on how well you meet the other lending criteria and how much you need to borrow.

As lower LTV borrowing is less of a risk to the lender, the interest rates offered tend to be more competitive.

The LTV is the percentage of the total cost of the property that you need to borrow. To calculate it, find out the total outstanding value of your mortgage, your property’s current value and then divide your outstanding mortgage balance by your property’s value:

Example:

You have £100,000 left to pay on your mortgage

Your property is worth £200,000

Divide £100,000 by £200,000

= 0.50.5 x 100 = 50 (or 50% LTV)

When you remortgage, the LTV will depend on:

• How much of the original loan you have repaid

• Whether your property has increased in value and;

• Whether you need to borrow more money or are simply remortgaging for a better interest rate

Historically older borrowers have had a harder time remortgaging, especially if they are nearing retirement age, due to the maximum age limits imposed by many lenders.

However, in recent years there has been a noticeable increase in flexibility in this area, with some lenders extending their maximum age of borrower and maximum age by which the mortgage needs to be repaid.

When nearing retirement age, many people reassess their finances, and a large part of this is likely to be looking at their remaining mortgage balance, and how they can live more comfortably in their later years. 

People in these circumstances may consider more specialist products, such as:

• Remortgaging onto a retirement interest-only mortgage (RIO) - often a helpful option for homeowners likely to fall short of repaying the final lump sum balance on an interest-only mortgage.

• Remortgage onto an equity release product - always take qualified financial advice from an equity release specialist before considering this type of remortgage.

There are a few potential disadvantages to remortgaging, although, much like the benefits, your circumstances will have a big impact on whether they impact you, and to what extent:

• Usually you'll need to pay remortgage fees, which can get costly if you remortgage every 2 or 5 years throughout the full duration of the mortgage - sometimes cancelling out the financial benefits

• Not everyone is able to remortgage when they want to, as it can be difficult to qualify, especially if mortgage rates have risen or your circumstances have changed

• Remortgaging can take time, it's often quicker to do a product transfer

• A new lender may not always be the right fit, especially if you're happy with your existing one

• If you try to remortgage while still in an introductory or fixed rate period, you may have to pay additional charges know as ERCs