I purchased my first home in August 2019 and opted for a two years fixed-rate mortgage. In the summer, the repayment rate jumps significantly. So, it’s time to look at remortgaging for the first time.
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It’s hard to know where to start. Naturally, I headed to the internet to do some research, looking for a guide. If you are not a regular reader of my blog, I’m guessing that’s what you have done too. The past two years have gone so fast – even if most of it has been spent in lockdown.
When I bought my first home, I felt entirely out of my depth with the jargon, paperwork and the length of time the process took. Truth be told, I have been dreading remortgaging. Our home is an old prefab house with a steel frame. It has been bricked up, but only specific lenders offer mortgages on this property type. It would be so much easier if we picked a new build.
Remortgage Calculator
Basically, remortgaging is the process of switching to a new mortgage to pay off your original loan. Like me, most remortgage to secure a better rate or to keep monthly repayments affordable. I was thankful for the Remortgage Calculator. It is simple to use and gives precise figures to show payments and interest rates.
How does remortgaging work?
Pick the right deal
Just like when you set out getting a mortgage initially, you will need to see what deals are out there. You will need to set some time aside to choose the right deal for you. Deals include fixed-rate interest, standard variable rate and tracker rates. You may be able to switch to a better rate by remortgaging with the same lender.
Mortgage Exit Fees
Firstly, check if there are any exit fees on your current mortgage. These vary between lenders, and you could be charged between £50-300. How can you avoid this fee? Make sure your remortgage completes after your current tie-in ends.
Set-up fees
This was the biggest disappointment for me. If you choose to change lender, these may be unavoidable. But, it could be fee-free or lower if you go with your current lender. Depending on the lender, these can be between £400-3000. Ouch!
Other fees
There may be other fees you need to consider. You may have to pay such as a solicitor’s fee, valuation fee (conveyancer). Legal fees will be paid to a solicitor or conveyancer, but they are typically less than your original mortgage. You will also have to pay stamp duty. I’m in Wales, and stamp duty is free for transactions for less than £180,000. You can also use a stamp duty calculator.
Check your homes current value
What is your home worth? It may have risen significantly. Using Zoopla, I was amazed to see that our home could have been increased by £23k. We live in an area on the edge of Cardiff, and the Metro hub is currently being built. I didn’t think this would have such an impact.
Comparison websites
Using a mortgage comparison tool can give you a better idea of how much you will pay in monthly costs and interest. You can also look at the mortgage duration and any product fees you may need to pay. The most popular are Money Super Market, Compare the Market, and Go Compare. There is also lots of helpful information on Mortgage Calculator.
Get your paperwork together
Just like when you applied for your mortgage the first time around, you will need some paperwork. This includes your latest P60, your last 3-6 months bank statements and proof of address (utility bills or credit card bills. You may also need 3-6 months of payslips and ID documents, such as your passport. Also, look at the balance on your credit cards and loans. Can these be paid off? When researching online, it said to check your credit report, but I have never done this.
Get some advice
I have no idea what I’m doing, so I’m going to get some advice from an independent mortgage broker. There is a small fee, but as they do this day in and day out. They will find a mortgage that fits your needs. Also, suppose the chosen mortgage turns out to be unsuitable. In that case, you have the extra security of being able to complain to the Financial Conduct Authority.
Good luck!
If you are remortgaging for the first time, good luck! Fingers crossed it will be a smooth progress. Whether you are looking to release or save money, I hope it is successful for you. Lastly, don’t forget your home insurance.
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Very valuable information, it is not at all blogs that we find this, I was looking for something like that and found it here.
Thank you, so glad you found it useful!