Remortgaging is switching your exisiting home loan to another mortgage lender, in order to lower the amount you’re paying each month.
You can move to another lender at any time to get a lower interest rate – you don’t have to be in the process of buying a new home.
You are not obliged to stick with your original mortgage lender for the full mortgage term, although you need to calculate any exit costs on your existing loan.
But if remortgaging is suitable for you, you could save hundreds or even thousands of pounds a year.
Here’s the Step by Step Basics
– Find out what is on the market – a good mortgage broker is ideal for this.
– Compare the costs / fees to see what you can save – don’t forget to add in Early Redemption Penalties or other exit charges from your existing loan plus any legal, survey or administrative costs associated with the proposed new loan.
– Tell your current mortgage company / lender that you intend on moving. They may come up with a better deal. Check this against the broker’s recommendation.
(For more on this, see Early redemption penalties explained.) Also, when you’re comparing deals, it’s essential to take the set-up fee (also called an arrangement or reservation fee) into account, along with the valuation and solicitor’s costs.