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This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Q: How does remortgaging work?
Answer: Remortgaging is the process of searching for a better mortgage deal, either with your current lender or a new provider.
You may want to remortgage because your fixed rate loan has reached the end of the initial period and you are facing a much higher standard variable rate and/or you want a better rate than you currently have.
However, there could be many reasons that someone would want to search for a better deal. For example, you may need more flexibility so you can make overpayments or you want to borrow more money.
In the first instance, talk with your current lender as they may be able to offer you a better rate or possibly a new product without fees where the savings offset anything gained by remortgaging. You can also find out if there are any fees to expect if you do happen to take your business elsewhere.
The next step is to search the market for the rates other lenders are offering. Be sure to check for fees and charges, not just the interest rate.
Next, calculate your loan-to-value ratio (LTV) as a lower LTV will get you a better rate. To do this, divide your outstanding mortgage balance by the current value of your property.
Finally, just as you did when you initially took out a mortgage, check your financial health including your credit score. Lenders will evaluate your finances the same way for remortgaging as they do for a mortgage.
Whatever your reason for remortgaging, it’s crucial that you research all your options thoroughly so you select the deal that works best for you.
A mortgage adviser can provide great insight in this situation asit’s their job to know the market inside and out.