Can you tell me about re-mortgaging?
Paul Demarco, Mortgage Adviser at ESPC, talks us through this topic.
A remortgage is a simple process moving from one lender to another. The question is: why and when should someone remortgage away from their existing lender?
Why and when?
The main reason for doing so is normally to save on your monthly mortgage costs; however there may be other reasons why you should remortgage.
One of the most important factors when deciding to change your mortgage is what is the loan to value (the ratio of what the outstanding balance of the mortgage is in relation to the current property value)? This will determine the interest rate that you will be offered.
Choice of rates
The majority of lenders will offer clients a range of interest rates to choose from when they come to the end of their fixed rate or tracker deal. They will also be offered the lenders current standard variable rate, and depending on the lender, the rates can be as low as 2.5%. Unfortunately there is no maximum, although 5.99% is not uncommon.
Some lenders are not offering clients anything except the lenders current standard variable rate when their deal comes to an end. This may not be a suitable solution for a client as the standard variable rate may be changed at any time by a lender and may increase in the current climate as opposed to decrease.
Things to consider
A client also needs to consider any early redemption penalties that may apply before deciding on whether to switch to another lender.
There are many other reasons why you would potentially want to remortgage, one being to consolidate debt. This is a very complex area and advice should be sought by a client before deciding if this right for you, as there are advantages and disadvantages in doing so.
A mortgage of a property, usually your main residence (but not in all cases), that has no current mortgage is becoming a more popular way of releasing equity. These funds can be used to buy another property outright to use as a second property or a property to rent out.
In summary, before deciding on what your existing lender can offer from their existing portfolio of mortgage rates, seek independent advice on what is the best solution for you. At ESPC Mortgages we can help you decide what the best option is for you.
We can also look at any other financial gaps that you may have and give advice on how to address these as well. Come and talk to me today and we would be more than happy to assist you.
Want to know more?
Paul Demarco is a Financial and Mortgage adviser who helps clients with all their mortgage needs and requirements, identifying any other gaps that they may have and advising on a solution to any potential gaps. You can call him on 07778 066595 for more information.
Read some of Paul's other articles:
- Independent financial advice
- The buy-to-let mortgage market
- Could a guarantor help you secure a mortgage
- 2013 - Lucky for some
The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.