Douing A Perfect Mortgage Refinance

Remortgaging involves moving your existing mortgage to a new deal or mortgage provider. Remortgaging has become relatively common in the last twenty years, and makes up around half of all new mortgage deals. There are several reasons why you would want to remortgage, and you can remortgage relatively easily after a number of years to ensure you are getting the best deal.

Remortgaging can help reduce the cost of your mortgage. The majority of mortgages sold today have a limited period during which a promotionalinterest rate applies. After this limited period is over, the interest rate then (reduced) reverts to the lender's standard variable rate. In most cases, if you are paying the mortgage lender's standard variable rate, your mortgage is costing you too much. You can find a better deal by switching lenders and taking advantage of a new promotional deal.

You may also need to remortgage if you want to move house. Although some lenders allow you to transfer your existing mortgage to your new property, it is unlikely that the new property will be of the same value and your provider will insist that a valuation is carried out. If you need to borrow extra money, it makes sense to shop around for a better deal and take out a new mortgage that covers this extra amount too.

Alternatively, you may find that your mortgage no longer suits your circumstances. For example, if you inherit a large sum of money and wish to use this to make overpayments, you could find that your existing mortgage does not allow you to do this. Perhaps you have decided to open your own business and would like to take a payment holiday while your set up your new firm, or require a more flexible mortgage deal. If your circumstances change there are often mortgages that will offer you a more suitable deal. You may find you are tied to a fixed rate deal when the Bank of England's base rate has been reduced, and you are paying too much interest. In this case, it makes sense to find a mortgage which offers you a better deal.

You may simply be disappointed with your existing mortgage deal. Unfortunately, there are millions of home-owners whose endowment policy will not grow sufficiently to pay off their mortgage. In many cases, it is sensible to convert at least a portion of your mortgage to a repayment plan, where part of the amount borrowed is paid off each month.

In some cases, remortgaging may not be worthwhile. For instance, if you are nearing the end of your current mortgage term, or do not have a large outstanding balance, the cost of remortgaging is likely to outweigh the potential savings. Ensure you estimate the financial benefits of remortgaging carefully. For more information see The Cost of Remortgaging.

Remember to research new mortgage deals before making a final decision. If you are unsure, you may wish to consult a specialised mortgage broker.


How to Remortgage
Remortgaging allows you to stay in your own home and it is relatively simple to do. In some cases, you are able to choose a mortgage deal yourself, without the help of a dedicated broker. Newspapers, magazines and price comparison websites provide regularly updated information about mortgage lenders' latest deals. Alternatively, you can visit lenders' high street branches to enquire about their latest offers.

Although searching for a mortgage yourself is riskier, because you do not have as much experience as a professional, it could save you the cost of the broker's fees. Conversely, a mortgage broker can take the hassle out of finding a good deal by taking care of many of the administrative tasks you need to deal with. A broker may also be able to negotiate special deals which were not previously available to you. If you decide you would like the help of a mortgage broker, ensure you shop around for the best deal, as fees vary.

Whether you choose to use a mortgage broker or not, you are required to complete a new mortgage application, which will be considered by the lender as if it were a regular application. The lender will also ask for a valuation of the property and a solicitor will be hired to ensure that the legal aspects of the mortgage are correctly completed.