Re-Mortgaging – The How and Why
Mid-mortgage crisis?
There comes a time in the life of most home owners when they stop and ponder on the wisdom of re-mortgaging. Hundreds of thousands of people do it every year. We look at why they do it and how to do it.
Served us well
When you took out the mortgage to buy your current home you spent a lot of effort getting the right deal and deciding how much you could spend and what type of mortgage to have. But if you’ve had that same mortgage for some years you might be starting to think about re-mortgaging.
You might have a specific reason that has prompted you to re-mortgage: maybe the children are growing up and moving on to University, so there are tuition fees to pay, or maybe you’d like to invest in that bit of extra space with an extension, or maybe a new kitchen, perhaps it’s a business deal that’s been wandering around your mind for far too long to ignore any more? Or maybe you want to consolidate all your debts into one lump in your mortgage and give yourself a fantastic holiday into the deal. Whatever the reason it’s incredibly easy to re-mortgage and it can save you thousands of pounds, if you do it sensibly.
A straight switch and save
To be honest you can only realistically save money if you are simply switching your mortgage rather than taking out a bigger one. But if you are going to take out a big loan, then putting it on your mortgage can be very cost-effective.
There are many people on standard variable interest mortgages who could save about a £1,000 a year by re-mortgaging to another company. How do you get to that magic figure? Well, if your mortgage is currently £100,000 and then switch to a deal which is running at 1% less interest then you will save about £1,000 in a year.
How do you do it?
First of all make sure you are not tied into your existing mortgage. If you are going to incur penalties for moving then you will have to think hard about how much you will save once you have paid these fees. You may find that you haven’t got very long before the period in which those penalties apply runs out, so it may just be a waiting game for you.
More than likely you won’t be staying with your existing provider as they are unlikely to offer an existing customer a better deal than that which they are already on, so shop around. When you find a mortgage that suits get a redemption statement from your existing lender that shows exactly how much you have left on the current mortgage.
Surveyor and fees
If you choose a dedicated re-mortgage product you may well find the company is offering free survey and administration charges. Otherwise you will have to pay to have your house surveyed at a cost of roughly £300 and you will have legal fees of about £300 plus an arrangement fee, of a similar amount, so in that case, to re-mortgage will cost you about £1,000.
It should only take about a month to complete the process of re-mortgaging, depending on the speed of the solicitor and surveyor as well as your lenders. As long as the survey doesn’t throw up any new issues with the condition of the property it should be a straight forward process.
Money, money, money
As you can see re-mortgaging isn’t something you can do for nothing, but it can be a refreshing breath of fresh air not only for your finances but also sometimes for other aspects of your life.
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