Many people wonder what a remortgage is. Remortgaging is the process where you pay off your existing mortgage, then switch to another lender.
There are valid reasons to consider this, but you need to consider the involved costs before doing so.
At a glance
1. You must check the value of your property. It may have increased in value since the last check. Typically with a higher property value in relation to the mortgage, more deals may be available to you if you decide to remortgage and you may be offered cheaper deals.
2. Always check the market for mortgage deals as this is the starting point for comparison between what you are paying now with what you might be able to get elsewhere.
3. You should be sure about the Ben what is remortgage edits of switching that outweighs the costs is. Even though you may be offered lower rates, you need to take into account any fees associated with switching along with the remaining length of your loan.
4. Remember to take what you have found to a mortgage broker as they have access to mortgages, which aren't available on comparison sites, so you may be able to improve on what you've found. Such brokers also double check the costs and benefits of switching. Always ask for an advised service.
5. You must set a reminder to review your mortgage every year. People who remortgage also get an introductory deal on the interest rate and when this ends, they are usually put on a less competitive variable rate.
Check the costs
Before switching, you must be sure to check out the costs. Some lenders also offer fee-free deals to tempt people but if they don't, people have legal, valuation and administration costs to pay.
The deals can be compared with the Annual Percentage Rate of Charge (APRC). The APRC provides a way of calculating interest rates that incorporate some mortgage-related fees in the calculation, giving a way to compare mortgage deals.
What might look like a money saving deal could end up being loss of money if you don't do your research first.
Your lender's valuation
You should bear in mind while applying for a mortgage that the lender's valuation may just involve checking the outside of the property from the street.
If the valuation is much too low and you are losing out on a better rate as a result, then you should ask the lender to reconsider. There are also lenders who provide bad credit mortgages.