Mortgages aren’t as complicated as they seem – and the same can be said for remortgaging. It can feel like something you’re locked into for life, but this isn’t always the case. A mortgage isn’t a one-time purchase and should instead be considered as something you can review every few years, or when circumstances change, in order to help your mortgage work for you.
What is remortgaging?
Remortgaging means to take out a new mortgage on a property you already own, to replace your current deal. This can be done up to six months before your mortgage deal expires and it gives a mortgage advisor a chance to research the mortgage products on the market to see if there is a better fit for you.
At the point of remortgage, you can revisit your budget and the new mortgage product that replaces your current one can be changed to suit your current situation.
- If you require cheaper monthly payments, a mortgage can be extended out over a longer period of time. This could be over 25/28/30/33/35 & up to 40 years (age permitting)
- Alternatively, you can reduce your term down from 23 or 22 years to 15 or 10. This would result in paying it off early.
A mortgage product is bespoke to each client and their current financial situation. When your deal is coming up to expiry, a broker can research raising additional money against the security of your house if you require extra money.
Raising additional money can be for:
- Home improvements
- Buying a car
- A deposit on a second home
- Paying off a Help to Buy
- Staircasing out of shared ownership
- University costs
- Consolidating debts
If your situation doesn’t allow you to remortgage, your mortgage advisor can speak to your current lender and see what product they can offer you, and you’ll be able to swap within their product range without producing any documentation. It’s a simple substitution. It doesn’t have to be intimidating – especially if you go through a broker or an advisor.
How does remortgaging work?
The remortgaging process can be very simple if you go through an experienced advisor or broker. It will be quicker than buying the home, as you are already the owner.
Here’s the process…
Speak to your advisor to complete a fact find, or you can download and complete a fact find online here. This is the process of getting an idea of where you stand financially by assessing factors such as your incomings and outgoings.
Then, you’ll need to supply relevant documentation to support the information gathered in your fact find. This includes:
- Passport (or another accepted form of ID)
- Proof of address
- Current mortgage details
- Payslips from the last three months, or accounts and tax returns if you’re self-employed
- Proof of any commission or bonuses
- Bank statements
The mortgage advisor will recommend your options, and you’ll discuss what your preference would be.
The mortgage advisor will complete a decision in principle with the recommended lender and then submit a full application. A lender will do a valuation (often remotely, without needing to go the property), and assess the documents needed for the application. If all is accepted, an offer will be issued.
The solicitor paperwork is complete and a date is set for the new mortgage product to be activated. If you’re remortgaging to pay off a Help to Buy loan or staircasing out of a shared ownership, there is an extra stage and the remortgage process will be longer due to the third party involvement.
You need to obtain a RICS valuation report to supply to the third party so that you and them both know the amount that is to be raised to repay them. If you are paying back a loan, you also need to contact Help to Buy or the Housing Association to let them know that you want to repay the loan, so they can complete the paperwork in-house.
When should I remortgage?
You should be looking into your remortgage up to six months before your current deal ends. That way, your mortgage can be approved and is ready and waiting to replace your current deal once your product with the existing lender has expired.
If you speak to your advisor and they recommend that you stay with your existing lender, you could be moved onto the new mortgage product before your current deal ends without any early redemption fees.
Here at Mortgage Light, we have staff that specialise in remortgaging and we aim to make the whole process easy and stress-free for you. We believe that mortgaging and remortgaging should be simple, and we want to make transactions as smooth as possible. Get in touch with us today.