remortgage rates

Remortgaging has appeared as a suitable house financing option for people in the UK.

This remortgage guide will help you with everything you need to know to make the right decision. 

33% of the Uk citizens have remortgaged their homes once. You may be looking to remortgage your house as your fixed rate period will end soon. 

With inflation skyrocketing, the SVR rate will go up like crazy. It will cost you more in terms of repayments if you don’t remortgage your property.

That said, it’s not easy to go through a revaluation process with a bank unless you keep track of the new deals, LTV ratios, remortgage interest rates, and time.

What Is Remortgaging?

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Remortgage is the process of taking a new mortgage loan on the same property. You can remortgage your property even if you have already taken a mortgage.

People usually shift from one lender to another, but you can also take a remortgage loan with your existing lender. Remortgage rates are also much lower at times.

Mainly, you go for it because you want to cut down your interests, get money on your house equity, or finance home improvements with another mortgage.

It may seem daunting at first, but as you have already gone through mortgaging your assets, you won’t face much hassle.

Is It The Right Time For Remortgages?

Remortgage UK

The rising inflation in the Uk is gnawing at household expenses. With the cost of living rising in the sky, people are worried about making both ends meet.

In the current market, the fear of losing an opportunity is in people’s minds. Thus, they are forced to think of their mortgage as an extra cost in their pockets.

Amid such circumstances, taking the right financial decisions is the need of the hour. That’s where a remortgage kicks in– getting a second mortgage to pay off debts at low-interest rates.

Historically, the rise in the interest rate has been the highest since 2009. That’s why lenders are shrinking their mortgages and raising interest rates compared to current remortgage rates.

At the time of writing this article, the interest rates have jumped to 1.75%, and the bank of London will increase it to 2.25% by the end of this year. As the Uk housing market is facing a slowdown, it’s high time to fetch some best deals before they vanish from the market.

Those flexible mortgage UK can help you capitalise on the opportunity that otherwise you can miss out on.It will help you save you from paying extra costs on impending interest rates that will soon be increased in the coming days.

Reasons to remortgage your property in 2022:

best remortgage rates

You wouldn’t like to miss any opportunity in the property market. As the market will shrink in the upcoming days, jumping on to the bandwagon of remortgaging is the best choice for you.

In simpler words, remortgaging can save thousands. You can cut the high-interest costs, get the best deals that suit your finances, make reasonable repayments and release equity.Let’s find out in detail why it’s necessary to hop on to a remortgage for your property.

You will be charged at a higher SVR if your fixed-rate period ends. The sudden increase in interest can disrupt your finances, and you may find it hard to cope with the higher repayments.

The rising Bank of London rates can also make your monthly repayments uncertain. It’s high time to find a solution, and remortgaging is optimum because the remortgage rates are low.

You can lock with another lender and repay your existing mortgage months before your term ends.Though you may be penalised for early repayment, which will be less than 5%, you can find a lower interest rate mortgage provider. It is worth paying early repayment charges because of the ease of lower interest rates.

When you mortgage your property, you must deposit an amount of 20%. It means your LTV is higher. As you pay back your loan, you own more of your property.

If you shift to another mortgage provider at the end of your loan term, you may get more money because your LTV is low.It, in turn, affects your monthly repayments.

Thus, you borrow more money on easy repayments with a remortgage. You can divert that money to pay off your debts, repair your home, or invest somewhere.Therefore, it’s a savvy decision to go for a remortgage.

ZSince it’s been years, you have been living in a mortgaged house. You may have renovated or refurbished it.

Thus, home improvement isn’t a waste of money because it has increased your house’s value. Let’s say your house value has increased by 25%, and you have paid up to 80% of your mortgage.

You’re in a better financial condition. Instead of sticking with the same mortgage, you remortgage your house to get better deals.

Paying off the first loan makes you eligible to secure another one on low LTVs and thus on little monthly interest repayments.

Many people don’t seem to get this out-of-the-box idea that remortgaging can bring other benefits to their finances than lower interest rates or better deals.

One reason to go for it is buying a new property from the released equity. Once you exit the current mortgage, you will go for remortgaging and put the equity in another house.

With the house prices touching the sky, it’s harder for home buyers to invest in a buy-to-let property. With many flexible mortgages UK, it wouldn’t be a problem to repay the monthly payments. So, a remortgage can be a way to go for it.

You can then rent the house and earn money to repay your instalments. Likewise, you can save some finance by upgrading your living standards.

How Difficult Is It To Get A Remortgage Loan?

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Borrowers don’t find any difficulty in remortgaging their property. Especially if we compare it with a mortgage, it’s easier.

You have already experienced getting a mortgage, so you won’t find it hard. You only have to find a suitable lender, prepare your application, and connect your solicitor with that lender.

Based on your application, you can get some best rates. Besides, it also helps you get a loan even if your credit score is low. But, that comes with high-interest rates.

Usually, these loans are processed in less than six weeks. You can easily get a loan if you set everything right, make your application straightforward, and give practical reasons for remortgaging.

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How To Remortgage In The UK?

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Here is a step-by-step guide to getting a remortgage loan for your house. Follow these steps to get an idea of how it works.

First, you must determine where and when to exit your mortgage. Doing this gives you enough time to figure out another lender as you are ahead of time.

You may get a call or a notification from your lender that your fixed rate period will soon end. Knowing that the variable rate will increase, you can start finding a new lender.

Once you show your concerns to your lender, they may give you your exit strategy fees and early repayment charges.

After estimating the repayment money you must pay to come out of the mortgage, you can define your remortgage requirements.

You need to find your house value before asking for a remortgage. You can do this with a calculator. Once you find your house value, you can divide it with the amount of loan you want to borrow.
In this way, you can get your remortgage LTV.

Loan affordability comes first when you apply for a loan. Each lender has different evaluating criteria, taking different values into account.

You can find the maximum loan amount you can get by subtracting your expenses from your income and multiplying it by 4.5. It gives you an idea of how much you will borrow from a lender.

Changing a loan provider requires a solicitor adept at dealing with financial issues. They can help you prepare all documentation and inform you on legal issues of changing a lender.

After going into the loan, they can prepare the paperwork and sign the deed agreement.

You need to gather all the necessary documentation before applying for the loan. It will help you get it as soon as possible. However, your application may get canceled if you fail to provide it in time.

 The required documents are:

  • Form P60 contains all your previous years’ tax details.
    Your IDs, including a driving license or passport.
  • Bank statements for the past three months.
  • Credit card statements
  • Address details.

     

Some lenders may ask for specific documents other than those mentioned, so you have to procure them to get a loan.

Impressed by your application, the lender may ask for your property valuation. It can be done in two ways.

Either they ask for your house survey to confirm whether your property is with the money you ask for, or they ask you to fill out an online form.

With that said, they may visit your property to find out its exact value. The valuation process doesn’t take much time. Based on the parameters, you may set the borrowing price for your house.

If it goes well with your requirements, you can ask for the remortgage; otherwise, you can withdraw the application.

Costs Associated With Remortgaging:

flexible mortgage uk

Getting a remortgage isn’t free of cost. Like every other loan type, you have to pay some fees. If you have not included it in this venture, you may find it hard to procure the loan.

These costs include some essential fees you need to pay. So, there is escaping it. However, you can save some extra bucks by getting savvy on costs.

Loan Arrangement Fees:

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Every lender charges an arrangement fee that is part of your borrowing process. Nevertheless, several factors govern these fees.

Depending on your loan provider, your arrangement fees may vary. Some charge greater fees while others don’t ask you to pay much, so their charges are minimal in that case.

It isn’t mandatory, but some lenders also charge the booking fee. These seem difficult to pay such fees, but that’s how some lending companies work.

You may also pay these fees as a one-time charge at once, or they get added to your mortgage repayments.

Solicitor Fees:

remortgage guide

As you need the helping hand of a solicitor to prepare your papers, it comes with costs.These papers are crucial to follow a legal procedure, and if they contain any loopholes, you may encounter many legal and financial problems.

That’s why the solicitor will charge some documentation fees from you. It may not be very much as compared to the arrangement fees.

Early repayment charges:

Apart from the common fees involved in remortgaging, you must also pay some charges to your previous lender.These include early repayment fees. In any mortgage loan, it’s incumbent upon you to pay your loan within the specified time.

Even if you pay it before the completion of your time, you get penalised for early repayment. You can’t avoid it if you leave your lender earlier than you decided.

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Nevertheless, you can minimise the amount by exiting the loan just a few months before the term ends. The charges levied on you may incur thousands of pounds depending on your borrowed amount.

Exit fees:

Exit fees are the charges you must pay at the end of your loan term. In your case, you want to shift to some other lender before your term ends, so you should pay exit fees to your lender.

Final words:

 Remortgaging, in principle, is changing your lender before your mortgage term ends. That said, it brings some awesome benefits for you.

If you want to pay off your debts, buy a new property, avoid high SVR, or get equity, you can go for it.

In this article, we have provided you with a detailed remortgage guide to flexible remortgaging. Feel free to let us know about your feedback.

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