Information On Remortgages

Remortgage Explained

Remortgaging is changing mortgages without moving home. It is the process of changing your mortgage for a better rate, or to release some of the equity in your home, or to consolidate your debts. Getting a remortgage involves ending your current mortgage scheme and moving to a new one. This  may involve switching lenders because some lenders will not offer a remortgage scheme to existing customers.

Obtaining a remortgage with your existing lender would involve changing your deal - for instance changing from the lender's standard variable rate (SVR) to a fixed rate. If you are currently paying your lender's SVR then your mortgage lender probably has several other more attractive deals available. If you are currently on a lender's SVR then it is quite possible that you can change mortgage and/or provider without incurring a redemption penalty.

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Things to consider when remortgaging

Is there a "tie in"?

You may find the most attractive remortgage deal, but before you go for it be sure to find out whether you'll be tied in to the deal for longer than you want to be. For example if you find a really low 5 year fixed deal, you may find that you are tied in for another 2 years at the lender's SVR, ending the mortgage within this period will result in you having to pay a redemption charge.

What is the lenders standard variable rate ?

One of the most important factors to consider when looking to remortgage by entering into a new mortgage deal is the lender's standard variable rate (SVR), these vary between lenders and some are much higher than others. The SVR is the "default" or standard interest rate charged by the lender once any introductory offers have ended.  If your deal has an extended tie in then you will find yourself paying the SVR or paying redemption charges to switch lenders at the end of your fixed/capped etc period.

Is there any mortgage indemnity insurance to pay ?

Mortgage Indemnity, also known as mortgage indemnity guarantee (MIG) is a premium paid to a lender in order to purchase an insurance policy against future loss. The premium is usually charged when borrowing is in excess of the amount the lender considers they can safely lend and be assured of their money being returned if any future financial problems occur. Generally this cost is being phased out in the market but you may still encounter this premium for loans above 80% of the house value. The cost of this is therefore to be taken into account when selecting a lender for the remortgage.

Are there additional costs/fees ?

When choosing a new lender for your re-mortgage, make sure to find out whether the lender offers free valuation, set up fees or that they pay for the legal fees. Many lenders will offer to pay the legal fees providing that you use their appointed solicitor.