Guide to Remortgaging

What does it mean to remortgage?

Remortgaging is the act of transferring your mortgage from your current lender to a new one. This means that your new mortgage will replace your old one. There are many reasons that homeowners may choose to remortgage their home, such as seeking a better annual percentage rate (APR) or wanting to change the repayment type of their mortgage. It's important to carefully consider all of your options when deciding to remortgage, as a clear understanding of the various options available can help you make informed decisions that are tailored to your unique financial situation. You may want to work with a mortgage adviser to help you explore your options and find the best deal for your needs.

Why Remortgage?

One key factor to consider when deciding to remortgage is the value of your home. If the value of your home has increased significantly since you first took out your mortgage, it may be worth exploring the possibility of remortgaging. This is because your loan-to-value (LTV) ratio may now be much lower, which could potentially give you access to more favorable mortgage deals that may cost you less in interest and give you the option to release funds for home improvements or other expenses if needed.

It's also a good idea to regularly review your mortgage to see if a remortgage might be a good decision. For example, if you have a fixed rate mortgage that is coming to an end, you should speak to a mortgage adviser to explore your options for securing a new deal. In some cases, it may be possible to secure a new mortgage deal up to six months in advance of the end of your current deal, which could be beneficial if you think that interest rates might rise closer to the end of your current mortgage term.

There are many other reasons that you may want to consider remortgaging your home. For example, you may have an interest-only mortgage and want to switch to a capital and interest repayment mortgage so that you can start paying off your mortgage balance over time. Alternatively, you may be happy with your interest-only mortgage but want to switch to a mortgage deal that is more flexible and allows you to pay off larger lump sums or the full balance without incurring additional fees or early repayment charges. In some cases, you may want to do the opposite and extend your mortgage term to reduce your monthly payments, or switch from a repayment mortgage to an interest-only mortgage.

When should I look to remortgage?

If you allow your fixed rate mortgage to come to an end without either remortgaging or switching to a new deal with your current lender, you may be automatically rolled over onto their variable interest rate, which can fluctuate and is typically higher than fixed rates. It's important to balance the decision to remortgage against any early repayment charges that your current lender may apply if you are looking to remortgage early before your deal end date, as you want to ensure that the decision will leave you better off financially. A mortgage adviser can help you review all of your options and make the decision that is best for you.

At Key Mortgages Lincoln we will contact our existing clients 4-6 months in advance of their current mortgage deal coming to an end, as dependent upon your circumstances and the lender applied for we can apply and secure a new deal up to 6 months advance which could benefit you if you are expecting that interest rates will be rising in the near future.

Can I borrow more on my mortgage to do home improvements?

Another potential reason for remortgaging is to release funds for home improvements. If you have sufficient equity in your home, you may be able to remortgage to raise the funds needed for renovations such as building an extension, replacing windows, or updating your bathroom or kitchen. These improvements can not only make your home more comfortable and functional, but they may also increase the value of your home. It's worth noting that some lenders may be willing to lend at higher loan-to-value ratios for home improvement projects, so it may be worth speaking with a mortgage adviser to explore your options.

Can I pay off debt from remortgaging?

Yes with some lenders they will allow you to borrow more on your mortgage to consolidate some debts, as long as you have enough equity in your home to be able to release.

The credit commitments you might be able to consider to debt consolidate as part of your remortgage to pay off debts could be:

- Personal loans

- Car finance

- Mail order/Store cards

-Credit cards

It's never clear whether consolidating your debts in to your mortgage is the best decision or not, as ultimately it will all depend on the interest rates and amount of debt you have on the credit agreements in comparison to what the interest rate and term on the new mortgage they would be consolidated in to, plus there could be other more suitable options available to you. We recommend having a chat with our expert mortgage advisor's here at Key Mortgages who deal with debt consolidation regularly for clients in need, they will be able to review your individual circumstances in great detail and inform you of their recommendation once they get an understanding of your situation fully.

Debt consolidation is not always the most suitable option, consolidating debts must be carefully considered. It will usually mean more interest over a longer repayment term and there may also be early repayment charges on your current mortgage, you should think carefully before securing other debts against your home.

There are other ways to manage debt such as free debt advice charities, you can find out more by contacting Money Helper these services may be more suitable for you

How To Find the Best Remortgage Deal?
When looking to apply for a new remortgage, you should first double check the details of your current mortgage deal by finding your latest mortgage statement or you should be able to request a redemption statement from your current lender.

This will show you how much it would take to fully pay off your mortgage and advise you of any fees or early repayment charges that could be applicable. This will also show you your up to date mortgage balance outstanding so you know how much you would be looking to borrow from the new lender if you are looking to remortgage on a like for like basis with no additional mortgage borrowing. You should always compare the total cost of the deals such as the interest rates, fees that could be involved, any incentives such as cashback which can come with some deals as well as any other features for example in order to find the best deal. Our expert mortgage advisor's at Key Mortgage will be able to source these deals for you to find the most cost effective deal that is suitable to your individual circumstances and take care of the leg work involved to help make the process as stress free as possible.

How to apply for a remortgage?

Applying for a remortgage is similar to that of a brand new mortgage application when buying a house, however the overall process will be simpler in order to complete on the swap over.

If you find a remortgage deal that's your happy to proceed with first things first you will need to apply for the decision in principle (agreement in principle) from the lender offering that deal to ensure that lender is willing to offer you the mortgage amount that you require, that you pass their credit checks and their lending criteria - your mortgage advisor will be able to arrange this for you and will usually check whether you are likely to get accepted with the mortgage lender before they discuss the recommended mortgage deal as they will have access to check their criteria and affordability calculators. Once you have been approved in principle and happy with the deal, you can complete your remortgage application via your mortgage advisor.

What documents do I need for a remortgage application?

To apply for a remortgage you will need similar, if not the same documents to if you were doing a new mortgage application:

Proof of ID - A valid passport and/or drivers licence

Proof of address - Driver's licence (if not using for ID proof), up to date utility bills or council tax bill

Proof of income - Latest 3 months payslips or if self employed (up to latest 3 years tax calculations and accompanying tax year overviews)

Current finances proof - Latest bank statements evidencing income/outgoings, details of any current outstanding credit commitments you hold

Your latest mortgage statement/redemption statement

Further documents could be required as well dependent on your circumstances such as an up to date credit report, to which we recommend for our clients to use the 30 day free trial from Check My File which you can gain access to their site using our link here - Try it FREE for 30 days, then £14.99 a month - cancel online anytime.

What else is involved when you remortgage?

To remortgage when you do an application with a new lender they will need to carry out a valuation on your home to check they agree with the value provided on the application. The lender will arrange the surveyor to arrange a visit, this isn't allows a physical valuation in person and can sometimes be done as a drive-by or a desktop valuation.

You will also required a conveyancer to carry out the legal side of things when you remortgage. When picking a solicitor it is important to ensure that your chosen conveyancer is on that lender's approved panel that they will work with. The cost for a conveyancer to carry out the work for a standard remortgage is normally cheaper than it would have been if you were buying a property. If you want to try to avoid covering the potential costs of a solicitor, there tends to be some lenders that will offer either a fee-free legal service with certain deals or offer a cashback incentive which could help mitigate the solicitor expense, if this is your preference this is where it could be useful to consult and use a mortgage advisor who will be able to source you the deals that meet your needs.

With remortgaging it's always a excellent idea to review your insurances as well to make sure these are still suitable. For example you will be best to review your building/contents cover, life insurance, critical illness cover and income protection, which your mortgage advisor should be able to discuss and recommend if they think any changes are necessary.

Are you considering the possibility of remortgaging your home?

Our team of experienced mortgage advisers can assist you in determining the most suitable option for your individual circumstances, whether it be staying with your current lender or switching to a lender that offers a more competitive remortgage deal. Our expert mortgage advisers have access to a wide range of remortgage products and can provide professional, unbiased guidance to help you make the best decision for you and your loved ones. Contact us to learn more about the potential benefits and drawbacks of remortgaging.

Ready to explore your remortgage options?

To start the process of remortgaging with us, you will need to schedule a consultation with one of our expert advisers - you can easily book this yourself using the book now button in the corner of our website or contact us via our details below. During this meeting, we will discuss the best options for your specific situation and needs. Once we have determined the most suitable course of action, you can move forward with your remortgage application either through a video call platform like Zoom or Teams, or in person. Our advisers are here to guide you through every step of the process and ensure that you make a well-informed decision.

Telephone: 01522301473