What is a re-mortgage?

What is re-mortgaging?

This is the process of switching your mortgage from one lender to another on your current property. Your new mortgage will then replace your old one. On first taking out a mortgage you will generally be offered a fixed rate of interest for a set amount of time. When that fixed period ends your mortgage will be moved onto your lender’s Standard Variable Rate (SVR) unless you arrange a new deal. This could mean you pay more for your monthly mortgage payment. You can switch mortgage rates at any time, but people tend to look at their options for switching just before their existing rate is due to finish. We suggest 4-6 months before the end date of your existing deal.

So can you re-mortgage early?

Yes but, if you are planning to leave a fixed rate mortgage before the fixed term ends, you may have to pay an early repayment charge (ERC). The details of any ERC payable will be in your original mortgage offer so always check and take advice from an expert mortgage adviser so that you know what to expect. An ERC can be quite substantial, often 2-5% of your outstanding loan so always take advice from your mortgage adviser to ensure you don’t end up paying unnecessary charges or fees.

What other reasons might there be for re-mortgaging?

You may wish to re-mortgage if you are planning to borrow more money against your property - maybe for home improvements or debt consolidation. This means borrowing more on your mortgage using the equity which you may have gained as your home increases in price over time. Or you might simply want to review your interest rate and be looking to save money on your monthly bills by making sure you have the best rate possible for your individual circumstances.

How long does a re-mortgage take?

This will vary in the same way as applying for an initial mortgage. If all is straightforward it can be a matter of weeks but if you are borrowing extra or changing lender to obtain a better rate it can be a little longer. This is why we suggest 4-6 months before your existing rate ends so that there is adequate time to discuss your options and ensure any new mortgage is in place ready for the end date of your existing deal.

Your local mortgage broker is often able to secure a better rate for your mortgage than if you went directly to the lender yourself and will give you advice on all your options so that you can make an informed decision based on your individual circumstances.

Why not book an appointment with an adviser at Key Mortgages today and see how we can help?