With a quarter of UK mortgagers still on their lenders Standard Variable Rate (SVR) and many others sitting on uncompetitive deals, Charcol.co.uk, the complete mortgage service, has released five easy steps to help homeowners to remortgage and avoid unnecessary overpayments.
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Katie Tucker, Product Specialist for Charcol.co.uk comments: If the discount or fixed deal on your mortgage is about to come to an end you might have a nasty shock in store as lenders’ SVR’s have gone up considerably since you took your mortgage; typically more than a 1% increase in just the last year. The process of remortgaging can be seen as a real chore to some homeowners and many often leave thinking about it to the last minute and end up paying more than they need to.
Find a new mortgage deal
Borrowers with a £100,000 mortgage could save £147 a month in pure interest simply by remortgaging from SVR at 7.5 per cent to a more competitive loan at 5.34 per cent (7.5% APR). The monthly saving is a massive £450 for a mortgage of £250,000. With figures like this, even a one month delay loses you money. As it is still uncertain just how high interest rates will go this year, it is more crucial than ever for any borrowers whose mortgage is due to fall onto the lenders SVR this year, to be aware of their revised reversion rate, and to really do their homework to make sure they move onto the right deal.
Whilst speed is of the essence for those approaching the end of their deal – or already paying their lenders SVR, it is vital that no details are missed. It is really important to consider all elements of the process to ensure that the mortgage they move to is the most suitable for them. As mortgage needs have diversified, so has the range of mortgages available, so it makes sense to get some help in finding out whats out there rather than going it alone.
Charcol.co.uk hosts a fully comprehensive range of mortgage calculators to make life easier for borrowers wishing to check out how much they could save and recommends homeowners consider the following five steps when remortgaging:
Find a best-buy mortgage
Be prepared and think ahead
See what alternatives your existing lender can offer. Remember to ask how much your exit fee will be. The average is currently around £225.
Consider the term and features you need on your new mortgage
Work out what really matters to you: is it the total cost over the next few years, having free valuation and legals, or just a low rate.
Could you pay a little bit more each month to reduce the term?
Do you want to raise cash to consolidate debts or make improvements on your property?
Do you have savings that may suit an offset account?
Take to opportunity to review your insurances
If you are changing the loan amount of your mortgage you may need to top up your life assurance or critical illness policies.
If you have changed job or given up smoking this could also affect your cover needs and premium.
Make your application
At this stage you should seek advice to ensure you find the best mortgage deal for you.
You will usually need to present one form of ID, and verification of your and address and your income.
Contact a remortgage solicitor
If your deal does not include free legal services, you will need a solicitor, likewise if you need non-standard legal work (such as a person going on or off the mortgage).
Remortgaging is a simple process and does not require the same skills as for a purchase transaction. A solicitor who is cheap but efficient should suffice.
Make sure they complete on the right day the last thing you want is to be inadvertently made liable for Early Repayment Charges!
Tucker continues:Remortgaging neednt be a difficult process once you have identified your individual needs it can be easily achieved online or over the phone. Millions of people are now realising they could save money with a remortgage; UK lenders are fighting for business and there are lots of tasty remortgage offers out there, so why not spend 5 minutes to see how much you could save?
Competitive deals available at the moment include Halifaxs 5.29 per cent two year fixed rate with £999 arrangement fee (7.6 per cent APR), and Abbeys 5.34 per cent two year fixed rate (7.5 per cent APR), both of which include free valuation and legal work.
Alternatively, Charcols exclusive “Park Up and wait” mortgage is a good idea for anyone who needs to remortgage now but wants to hang on to see if rates improve. It is a tracker at 0.29 per cent over base for the whole term of your mortgage giving a current pay rate of 5.79 per cent (5.9 per cent APR). It is available up to 80 per cent loan to value, and crucially for an easy switch-over, it comes with no Arrangement fee, free valuation and free remortgage legal service. Of course it has no Early Repayment charges so you can remortgage away whenever you are ready.”
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