Use our UK Finance guide and learn by experience. We outline pitfalls so that you don't have to learn the hard way, as many of us often do.
Mortgage
A rough guide to Remortgaging
With interest rates still at a 50 year low, more an more borrowers are considering switching their mortgage deals. If you are one of them and are wondering what you should do next, I have complied a quick guide to get you started.
Why Remortgage
Remortgaging is a good way to escape high variable rates and take advantage of some the current fixed-rate or discount mortgages, which have much lower rates and attractive mortgage deals.
Remortgaging is also a way to raise funds for an expensive purchase. If you have owned your property for a few years it could be worth much more than your outstanding debt. By taking out a new, larger mortgage you can release money to spend as you choose. Remortgaging may also appeal if you are on a variable rate mortgage and believe that interest rates are about to rise. You can move to a fixed rate mortgage deal before this happens.
The Costs of remortgaging
Remortgaging costs money and before applying for a new remortgage deal you should find out just how expensive it is going to be.
Common remortgage expenses are:
Arrangement and administration fees for the new remortgage. Mortgage arrangement fees can vary from £150 - £1,500.
A remortgage valuation fee, which tends to be between £130 - £300 depending on your chosen lender and the value of your property.
An early redemption penalty on the existing mortgage. This can be from three to six months additional interest payments if you redeem the mortgage within a certain period of time after taking it out.
The mortgage indemnity premium. If the amount you are borrowing is more than 75% of the properties value (loan to value LTV) you may have to pay a one off mortgage indemnity guarantee (MIG) premium on the new mortgage.
Solicitors fees – unless your new lender offers free legal work.
Land registration and local search fees.
If you have negative equity in the property you will have to find the additional money that you owe on your old mortgage when you take out a remortgage. If this is the case don’t remortgage unless you really have to.
