Remortgaging my house for the first time – what happens now?

What is the process for remortgaging and what are your options? Darren Polson walks a homeowner looking for a new deal through each step…

The Question

My two-year mortgage is due to end in December this year and I’m not sure what to do next. Should I begin by getting a valuation and, if so, would an estate agent do this?

I also think house prices have increased in my area so I wonder if this increase will be factored into my new mortgage? How do I find out?

Then, how to do I find my next mortgage deal? My current deal is with HSBC – should I go back to them or can I shop around, so to speak?

Thanks so much for any advice you can offer this poor, confused newbie homeowner.

Darren’s Answer

Thank you for your question, hopefully I can help ease the confusion.

The first step is to speak to a mortgage broker. You may incur a fee for a valuation which may not be required so hold off on that just now.

Regarding house price increases, this will depend on which route you choose to take, for example staying with your current lender (HSBC) or moving to a new lender, which would be a full remortgage.

I will explain more below, but in terms of the best way to find out what deals are available, speak to a ‘whole of market’ broker. They can check the best deals HSBC have for your circumstances, as well as those with other lenders on the market.

Your two main options ahead of your current mortgage expiring are:

1. Remortgage to a new lender

A mortgage broker can search the market based on your outstanding mortgage balance and property value to see what rates are available to you.

This would effectively be a new mortgage application, which can incur legal costs and other set up fees. However, your broker can ensure free legal costs and a free valuation with certain lenders.

Some lenders also offer cashback deals for remortgage cases. There will be a credit-scored application and a full income / expenditure assessment. This will likely also include a valuation, which may help with the increases you mentioned.

2. Switch to a new rate with your current lender (HSBC)

This is classed as a rate switch or product transfer. The benefits of this are that there is almost never a credit score or need to provide proof of income as the lender has already assumed the risk with your current mortgage.

It also means there would be no need to carry out a valuation as the lender will have their own internal valuation of the property.

This can mean your loan-to-value (LTV) is positively impacted by the lender’s valuation rather than market value, potentially resulting in a better rate as this may be a better loan-to-value bracket.

Overall, both options can be essentially free to do, it just comes down to the rate difference between your current lender and the others on the market.

We always advise speaking to a broker. They can provide an assessment of your options and give you the best rates for your circumstances.

Additionally, a broker can check your deal again before your new rate takes effect to ensure this is still the best deal for your circumstances