When Should You Remortgage a Property?
You might be considering what’s a remortgage and whether it may be suitable for your needs. Typical examples include raising finance or switching to a more reasonable offer.
Do You Need a Deposit to Remortgage and Save Money?
No, provided you have enough equity, you won't need to pay anything further to remortgage at a better interest rate. Do you have to remortgage to reduce your rate? Yes, lenders won’t normally negotiate an interest rate on a standard product, so remortgaging is the best solution.
When should you remortgage to reduce your costs?
- A product transfer is one option. What’s a remortgage product transfer? It means you remain with the same lender but switch to a new product.
- What does remortgaging a house mean with another lender? You take out a new mortgage, pay back your existing loan, and start making repayments to the new provider.
What’s a remortgage LTV cap? The LTV (Loan to Value) is the maximum the lender will offer against your property value – this is normally up to 90%. If your home is worth £300,000, you can borrow up to £270,000.
Do You Have to Remortgage to Borrow More?
Yes, you can remortgage to increase the amount you’re borrowing. What’s a remortgage to borrow more? It's as simple as an initial mortgage application. The lender assesses your income, debts, outgoings and property value to decide whether they can lend the higher value you wish.
Can You Remortgage to Pay Off Debts?
Another option is to remortgage to consolidate debts, such as credit cards or personal loans. What’s a remortgage advantage to consolidating debt? Mortgage interest rates are much lower than short-term financing, although you'll be repaying the debt for longer – which might mean it costs more in the long term.
Should You Remortgage After a Fixed Term?
Remortgaging during a fixed-term contract can be costly because more lenders levy an early settlement or exit fee, calculated as a percentage of the total value. For example, what’s a remortgage exit fee might mean incurring a charge of 5% against the amount you currently owe.
Most people decide to remortgage after a fixed term has ended. Can I remortgage during a fixed term if I would still save money, irrespective of the exit charge? You certainly can, although it’s important to do your calculations carefully.
When Can You Remortgage Your House?
Most remortgages take around four to eight weeks, although you can complete the process faster if there are no complications and you comply with the lender’s eligibility criteria.
What’s a remortgage eligibility criteria? Lenders apply these rules to decide whether they can lend to you, including the maximum LTV they will offer and the upper limit available against your income.
Do you need a deposit to remortgage quickly? Generally, no, deposits are not a normal requirement, but there are other costs and fees to include in your calculations, including:
- The lender levies arrangement fees to set up the remortgage.
- Booking fees are sometimes charged as a non-refundable fee.
- Solicitor’s fees, although remortgage offers may include free legal work as a perk.
- Valuation fees to ensure the lender is confident they know the market value of your home.
- Early repayment charges if you’re deciding can I remortgage during a fixed term.
- Exit fees, separate from early exit charges, if the original lender charges a completion fee.
- Broker's costs are normally offset by the savings you make by remortgaging with independent advice.
What’s a remortgage broker? A broker independently assesses your requirements, compares thousands of potential products, and recommends the right lender and remortgage deal.
We also ensure you’re confident about when should you remortgage and make informed decisions, particularly if you’re unsure do you have to remortgage, or whether you would save money by staying with your current lender.
Do You Need a Deposit to Remortgage for a Much Higher Value?
A remortgage is secured against your home, so your equity acts in place of a deposit – you won’t need to put down a cash deposit as you would with an initial property purchase. What does remortgaging a house mean to utilise your equity? Let's say your property is worth £500,000 and you have a mortgage of £300,000 – you owe 60% of the property value and own equity of 40%.
Do you have to remortgage? Not at all; there is no obligation to remortgage. However, if you're looking into can you remortgage to pay off debts or restructure other financings, it may be a viable solution. Likewise, should you remortgage after a fixed term varies, but the right action is normally to proceed to avoid paying more interest than necessary.
Please contact Revolution Finance Brokers at any stage if you'd like more guidance about what’s a remortgage for and whether it's the best option for you.
2023-05-09 
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