A Simple Guide to Remortgaging: What You Need to Know
If you’re nearing the end of your fixed mortgage term, you might have started hearing the term “remortgaging.” But what does it mean, and how does it work? At Impact Specialist Finance, we’re here to simplify the process and guide you through the next steps.
How the Remortgaging Process Works
When it comes to remortgaging, there are two main routes you can take: switching to a new lender or staying with your current one and choosing a new rate. Each option has its own steps and considerations, and your choice will depend on your circumstances and goals.
Remortgaging to a New Lender
If you decide to move your mortgage to a new lender, the process is similar to applying for a mortgage when you first bought your home. This involves:
- Market Research: A mortgage broker, like Impact Specialist Finance, will search the market based on your outstanding mortgage balance, property value, and financial situation to identify competitive rates.
- New Mortgage Application: Switching to a new lender means submitting a fresh application, which includes a credit check, full assessment of your finances, and supporting documentation.
- Legal Costs and Fees: Legal work is required to transfer your mortgage to the new lender. Some lenders offer incentives like free legal services, free valuations, or cashback deals to offset these costs, so exploring options with your broker is key.
- Valuation: The new lender will conduct a valuation to confirm your property’s market value and determine your LTV ratio, which influences the rates available.
Once your application and valuation are approved, the lender will issue a formal mortgage offer. A solicitor or conveyancer will then manage the transfer process, ensuring the new mortgage is in place before your current deal ends.
Switching to a New Rate with Your Current Lender
Staying with your current lender for a new deal is often referred to as a rate switch or product transfer. This route can be quicker and more straightforward, offering benefits such as:
- No Credit Checks: Your current lender has already assessed your creditworthiness, so another credit check isn’t usually required.
- No Proof of Income: Updated income or expenditure details are often not needed, which is helpful if your financial circumstances have changed.
- No New Valuation: Lenders typically use their internal valuation of your property. If property prices have risen, this could positively impact your loan-to-value (LTV) ratio and unlock better rates.
The product transfer process is generally faster, as there’s less paperwork and no legal work involved. You simply choose a new rate, agree to the terms, and your lender updates your mortgage without interruption.
Which Option is Right for You?
The choice between remortgaging to a new lender and switching to a new rate with your current lender depends on your goals. If you’re looking for the best rates and are happy to go through the application process, exploring the market could save you money. However, if you value convenience and simplicity, a product transfer might be the better option.
Whichever route you choose, having an experienced mortgage broker by your side can make all the difference. At Impact Specialist Finance, we’ll guide you through every step and help you make the choice that’s right for your circumstances.
Ready to Explore Your Options?
Contact us today and let’s start your remortgaging journey!