loan search for homeowners

It can be frustrating to be in debt, paying a high rate of interest on credit card balances or unsecured loans, whilst the mortgage on your home also seems to be growing more expensive. Provided you have a reasonable amount to offer as a deposit and a reasonably healthy credit rating, however, remortgaging, of course, provides a way for you to take advantage of the most competitive rates that the market currently has to offer.  

Indeed, if your current mortgage term is about to expire, then remortgaging is something you will especially want to consider, in order to avoid reverting to your lender’s standard variable rate (which will probably not be the best rate you are able to secure).  

Remortgaging used to be a popular way for homeowners to release the equity in property that had built up over several years of mortgage repayments. In these days of it being more difficult to secure mortgages, high interest rates and uncertain property prices, however, fewer people tend to choose this method of long-term borrowing. Nevertheless, part remortgaging remains a solution for some people wishing to pay off debts or to release equity for other expenditure – provided, of course, that there is sufficient equity in the home.  

For those considering remortgaging, the following are some of the questions to ask or to bear in mind:  

What deals are available – this is a question of choosing the right type of remortgage for you. Just as with your current mortgage, this will be a choice of fixed-rate, a (Bank of England base rate) tracker mortgage, capped, discounted, or cashback, for example;  

Interest rate – probably most important, if you are looking to save money on your regular outgoings, is the rate of interest payable on your remortgage;  

Penalties – most mortgages (but especially those offering a fixed rate or discount) will carry a penalty for terminating early; generally called an early redemption charge. Since this can run into several thousands of pounds, you will need to establish how much you will have to pay in order to calculate whether it makes sense to switch mortgages;  

Arrangement fees – similarly, there is likely to be a charge for arranging your new mortgage. With mortgages generally in much shorter supply, the prospects of securing a remortgage without such an arrangement fee are few and far between. The typical cost is currently around £800 and, again, should be incorporated into your calculations of the costs and benefits of switching mortgages;  

Your current lender – if you can show that you have done your homework, know what other offers might be available, and have a reasonable credit history, there is nothing to stop you negotiating a remortgage and getting a better deal with your existing lender. This might also be a useful way of minimising any early redemption charge and arrangement fee.  

To conclude, remortgaging offers a way of changing your mortgage terms and conditions to those which better suit your present circumstances or which offer a more attractive rate of interest. Keep in mind: 

• The range of mortgage products from which you can choose; 
• The rates of interest currently on offer; 
• The cost of any early redemption charge;
• The arrangement fee for your new mortgage;
• The feasibility of negotiating a remortgage with your current lender.

The author of the above article is Eli Beaumont.

This article does not represent ‘financial advice’ as each persons individual requirements will be unique to their needs. If there is something in the article which you which to rely on then please check those details with any person with whom you arrange a financial product or service.

The views in this article represent those of the author and not those of Netbasic Limited.