Remortgaging has become common place since mortgage lenders keep offering their best deals to new customers. The savings involved in a remortgage can be substantial, especially if one has a large mortgage and is no longer availing some special offer.
Charges Involved
If you're thinking of remortaging, first check to see what it will cost you to change mortgage lenders. For example, if you are on a fixed-rate mortgage deal, it is probable that you will be charged a penalty which could amount to a few months worth of interest. It depends how large this amount is and if it does not negate any savings you make by switching to a cheaper, more attractive lender, there is a case for remortgaging.Also keep in mind that mortgage companies charge a standard fee for closing down a mortgage. However, mortgage lenders have recently reduced the amounts they charge.
Call your mortgage lender and find out how to calculate any early repayment charges.
A Cheaper Deal
Once you are sure that you want to remortgage and that it will not cost you more than you will save, the second step in the remortgage process is to search for a cheaper deal elsewhere.
Since mortgage lenders are always looking to attract new customers, finding a lower rate should not prove to be too difficult - provided your credit score is good. If not, you should be working on improving your credit score. Most companies will offer slightly different deals for remortgages and for house movers. You can ask for the assistance of a mortgage broker in this regard.
Other Costs
- Be aware that if you do switch mortgage lenders, you might have to pay for legal fees and a valuation. Some companies will offer to refund this money, if you do end up switching to them.
- You need to watch out for arrangement fees too – many of the cheapest deals carry heavy fees, which makes them less attractive to those who have smaller mortgages.
Talk to your current mortgage lender
Once you've found a better, cheaper remortgage deal, go back to your current lender and try and negotiate a better arrangement with them. Many of the times, they'd like to keep your business and will bring down the rates or make some kind of offer to one of their cheaper deals.
Make the switch
Only after you have a clear and complete picture it is time to decide. You should have spoken to your current lender and also searched the market for a cheaper one. Compare the total cost of switching (early repayment charges, exit fees, legal fees and valuation) against the amount you save each month.