People Remortgage for a number of different reasons. Many borrowers switch every few years so that they continue to benefit from the best available rates that meet their current needs. Most mortgages have low introductory rates, or fixed payments for a limited period.
When this period comes to an end the monthly cost of your mortgage may rise. You may find that there is a better product for your needs – this might
be in the form of lower payments, or you may find that it is useful to be able to fix and predict what your monthly payments will be.
A lot can happen in two or three years: you may want to extend your house or get a new kitchen. Remortgaging can help here too, as you may be able to borrow more than you did originally. This will often be a lot more cost effective than getting a bank loan.
Saving money on my mortgage
You can save money on your mortgage payments. Once you get to the end of your introductory period, typically your mortgage will revert to the lender’s Standard Variable Rate (SVR), which may be a lot higher than you have been paying. It may make sense to switch to another mortgage offering a better deal before you get to this point and could be 3 to 6 months before the end of the existing product term.
Your lender will contact you to let you know that your payments are changing. They may offer you a new product which may be on better terms than their SVR. Remember though, that what they offer will be from a limited range of their own products. We advise you to speak to your independent mortgage adviser who can advise on a much wider range of products and find you the best deal.
Fixing my payments
You may find that knowing exactly what your mortgage payment will be each month is useful. If you have a variable rate mortgage, payments will vary month-to-month. Switching to a fixed rate mortgage may suit you better: a fixed rate mortgage means that your payments will be the same every month. Speak to an experienced adviser who will be able to help find a mortgage product tailored to your circumstances.
Borrowing for home improvements, or other large expenses
You may decide that you want to make improvements to your house as an alternative to moving: getting a new kitchen, installing new windows, re-modelling the bathroom, building an extension. Or perhaps you are funding a wedding, or school fees?
You can apply for a loan for any of these reasons, and so a remortgage under these circumstances would mean that you borrow more (have a bigger loan) but may not end up paying a lot more each month. Adding to your mortgage can be a really cost-effective way of funding home Improvements, or other expenses.
You may find that you want to roll up some of your other debts -credit cards, or car loans for example, into one monthly payment. This can be cost effective in the short term, as the interest rate you would typically pay on a credit card or car loan will be much higher than the rate you would typically pay for a mortgage. However, you need to bear in mind that a mortgage is a long-term debt, so you would end up paying the debt over a longer time and it may cost you more in the end.
This kind of debt consolidation does have the advantage that you will have only one payment, rather than several, to make. Do make sure you can afford the monthly payments: speak to your mortgage adviser who will be able to help. Your adviser will take great care to make sure debt consolidation is the appropriate action to take and that it is fully justified.
Frequently Asked Questions
How long will it take to remortgage?
Applying for a remortgage is much more straightforward process than moving to a new house. The length of time it takes to arrange a remortgage can vary lender to lender. It can typically take 4- 6 weeks, but it may be much less.
When should I apply?
You can start arranging your new mortgage up to six months before the end of the introductory period. Remember it will take some time to arrange the new loan, so it’s best to give plenty of time for the process to happen. You can have everything in place and then put things on hold until the time is right. Your mortgage adviser will be able to help here.
Here at McRobieAdams we are interested in looking after our clients. This means that we will be in touch with you when we feel that you could get a better deal than the one you have. You will probably need to remortgage more often than you move to a new house, and it is common for people to switch their mortgage product every few years, to take advantage of the best deals.
We are best placed to know what the best deals are, and tailor our advice to your individual circumstance.