At a time when it seems to be increasingly difficult to purchase a property due to increased house prices, rising interest rates and lack of available properties in certain areas of the UK, more people are choosing to stay in their current home rather than move. So what does remortgage mean, how does it work and what process is involved?
What Does Remortgage Mean?
If you are an existing homeowner with a mortgage, when your current mortgage rate comes to an end you will need to secure a new rate, otherwise you will roll on to the higher standard variable rate of lending. If you are still tied into your current mortgage rate, you might want to borrow additional money to complete home improvements on your property, repay a Help to Buy loan or consolidate debts.
Remortgage Process Explained
A remortgage application process is not dissimilar to a mortgage application for a house purchase. Here is a step by step guide:
- We will first assess your income, expenditure and current situation to determine if the level of borrowing required is affordable. You will need to provide payslips and bank statements to provide evidence of this.
- The mortgage lender will need to complete a credit search to ensure your credit history is as disclosed on the application. They will also need to value your property; this is often paid for by the mortgage lender and simply confirms the property is appropriate security for the new mortgage.
- Once the lender has confirmed they are happy with your income and the valuation is satisfactory, they will issue you with a mortgage offer, which is typically valid for 6 months.
- There is a legal process involved with a remortgage and a solicitor will need to be appointed to deal with the transaction of moving the first charge on your property (mortgage) from one lender to another. Once this legal process has been finalised the mortgage can complete.
How Long Does the Remortgage Process Take?
Typically, the process from mortgage application to completion takes between 6-8 weeks to complete, however due to a recent increase in mortgage lending it is currently taking closer to 8-12 weeks for the mortgage to complete.
How Can We Help You With The Process?
If your fixed rate is coming to an end, we suggest starting a conversation 4 months before your current rate ends. We will compare the rates offered by your existing lender, with the remortgage rates available from the whole of the mortgage market and provide you with a recommendation to best suit your needs . If you want to borrow more money and you are still in the middle of a fixed rate period, there are still options available to you but an early repayment charge might be payable. In this instance, give us a call and we will discuss all of the options with you.
Product Transfer v Remortgage
Depending on your circumstances and the rates offered by your existing mortgage lender it can be more cost effective for you to remain with your current lender and request a product transfer or rate switch. This is something we can help you with and we will liaise with the lender to secure the new rate for you. More importantly, we will check that the rate you’re being offered is competitive compared to other lenders. The process for a product transfer is shorter and although it will still involve a quick conversation regarding your income, expenditure and current circumstances, you are not likely to have to provide any documents and there is no legal process involved. Therefore, a product transfer can be completed very quickly, but it is still sensible to start the conversation 4 months before your current rate ends.
Consulting with our team will help you navigate the options and talk you through the pros and cons. So if you have any questions regarding this subject or anything else mortgage related please contact us on 0800 1385856 and our advisers will be delighted to help you.