When Is The Best Time To Remortgage?

Best time to remortgage

The main reason people remortgage is to make sure they are not paying more than they need to. When a mortgage deal comes to an end, many people find themselves falling onto their lender’s expensive standard variable rate (SVR). The SVR is typically much higher than other mortgage rates so it pays to review your mortgage regularly.

Tip: Set a diary reminder to start shopping around at least three months before your current fixed or discount deal reverts to the lender’s standard variable rate.

What Is A Remortgage?

Remortgaging involves switching your current mortgage deal, either to stay with your existing lender or to move to a new one. Consider talking to an independent financial advisor for advice on the best time to remortgage. They will take into account your individual circumstances and the the costs of remortgage in order to find you the most appropriate mortgage product and rate.

One of the biggest reasons people remortgage is to save money by moving to a lower rate, another reason can be to reduce the payment term – by finding a cheaper deal and keeping repayments the same, means you could pay off your mortgage quicker. You can also remortgage if you want to utilise your home’s equity for additional cash by taking out a bigger loan, people usually do this to pay for home improvements.

When should I review my mortgage?

The most common time when people remortgage is when their current deal comes to an end. You can remortgage at any time but there is no point in doing so unnecessarily. You want to do so when it will benefit you the most.

This may be when:

  1. You’ve come to the end of a fixed rate mortgage deal and want to avoid your lender’s standard variable rate.
  2. Interest rates are lower than what you are currently paying.
  3. You have or have built up equity of 10% or more in your home.
  4. The benefits outweigh the costs.

Lets take a look at each of these in more detail.

1. Your Current Deal Is About To End

Fixed rate mortgages run for a set term, usually between 2 and 10 years, where you would then move onto your lender’s standard variable rate (SVR) which is generally higher than fixed term deals. Most people want to avoid this and so remortgage for when their current deal is due to end.

Interests rates fluctuate depending on the economy at the time, but it is important to shop around and to use a mortgage advisor, preferably a whole of market advisor, who has access to exclusive deals that aren’t accessible to the public.

Again, you could face early repayment charges if you want to leave early so be sure to check your dates.

2. When Interest Rates Are Low

Lenders are continually coming out with new mortgage deals and usually once you’ve had your mortgage for a few years, you’ll probably find that there are cheaper deals out there.

You can lock in to a low interest rate with a fixed rate mortgage and know that your repayments will stay the same for the next few years, whatever happens to other rates. However, if your currently still tied into your existing deal, you could face early repayment charges should you want to leave your deal early. It’s worth speaking with a mortgage advisor to decide if the cost is worth the saving.

3. When You Own Enough Equity In Your House

Equity is the amount of your home that you have paid for and the rest is mortgaged. The proportions are known as loan to value ratio (LTV) so if the price of your house has gone up, your mortgage will be a smaller percentage of the property’s value than it was when you started.
The more equity you own and the lower the LTV, the better remortgage deal you may be entitled to.

Example: your mortgage is 75% of the house price so now have the equivalent of a 25% deposit in the property when you remortgage, ensuring you a better deal.

4. When A New Mortgage Costs Less After Costs

Switching from one lender to another involves charges. You will always have to pay several different fees.

These can in include:

  • Arrangement fee
  • Valuation fee
  • Legal fees
  • Exit fee

When it comes to remortgaging, the best time to do so depends very much on your current deal and circumstances. It’s important to know when your current deal is due to end and shop around for different lenders.

Want to talk to an independent financial advisor about your mortgage? Email or call GIGLY today. We’ll run through some questions and help you find the best deal. We only work with independent financial advisors who have access to thousands of mortgage deals, including some exclusive offers.

Call our expert independent financial advisers now!

Call 020 3582 6091 or 0141 465 7632.
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