The Question
I am approaching the end of my mortgage deal – everyone says I need to remortgage but I’m clueless about what this means and what I need to do.
Please could you explain why I need to remortgage, how the process works and whether I’ll need a broker, solicitor and surveyor again? Also is a remortgage different from a mortgage?
Darren’s Answer
Thank you for your question, you have done the right thing by seeking support.
A remortgage is when you move your mortgage on your existing property from one lender to another.
Broadly speaking there are two main options when you are nearing the end of your current deal. Let’s break these down:
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 (your broker can ensure free legals and 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.
Switch to a new rate with your current lender
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.
There is also no need to carry out a valuation as the lender will have their own internal valuation of the property which can mean your loan-to-value is positively impacted by the lender’s valuation rather than market value.
This could result in a better rate at this loan to value bracket.
Remember that lenders’ rates are changing frequently at the moment, and this is an important decision to make.
It is always advisable to speak to a broker, who can provide an assessment of your remortgage options and give you the best rates on the market for your circumstances.
Meet our expert…
Darren Polson is head of mortgage operations at Aberdein Considine. He has been writing a regular column for What Mortgage for over two years and is now here to answer YOUR questions.
If you have a question for Darren please email kate.saines@emap.com or leave a message in the comments below.
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