More than a fifth of mortgage payers won’t shift to a new lender, and more than a third haven’t changed their mortgage in the past five years, according to research from YouGov. Despite a variety of new deals coming to the market and mortgage interest rates dropping, many homeowners are staying put and potentially paying over the odds when they really needn’t. Homeowners may be able to get a better deal by seeking advice from an experienced mortgage advisor. So is remortgaging a good idea? In this remortgaging guide, our experts at Oportfolio Mortgages will examine the benefits of remortgaging now, remortgaging advice, and why it should be something that every property owner considers.
Is It Worth Remortgaging?
So, how exactly can a mortgage adviser help, and why are so many people overpaying on their mortgage? For over 15 years, our main focus at Oportfolio has been helping people secure mortgages for a variety of different needs and scenarios. In recent years new purchases have been very popular. However, as mortgage rates have risen and purchasing property has become a fairly difficult task to complete in a lot of scenarios, we have focused a lot more of our time on helping current property owners to manage their existing loans. Unfortunately many people in the UK are paying way above the odds for their mortgage. One of the reasons for this is homeowners being placed on a lender’s Standard Variable Rate mortgage (SVR) once they have completed the duration of a fixed-rate deal. Is it worth remortgaging? I think that is a resounding YES!
Advice On Remortgaging Off The Standard Variable Rate
The standard variable rate is a rate set by a mortgage lender that borrowers will automatically fall on to when their fixed rate deal comes to an end. These SVRs are normally much higher than regular mortgage interest rates. That means that customers staying with their current lender who fail to negotiate a better deal (i.e. remortgage or product transfer) could end up paying more than they need to; something that the right advice can help you avoid. So, could you pay less with expert remortgaging advice in London?
It’s a situation that homeowners needn’t put up with. Recent activity in the mortgage market has meant that mortgage borrowing has gotten more expensive, and that means that borrowers need mortgage advice now more than ever. If you have a mortgage deal that is coming to an end soon, now is a great time to consider remortgaging with the help of a mortgage broker.
Benefits of Remortgaging
So what is remortgaging? Remortgaging is the process of switching your existing mortgage to a new deal, whether with the same lender or a different one. It can offer a range of benefits that can make it a good idea for many homeowners. However, you should always weigh up the benefits of remortgaging your property with a qualified mortgage professional before making any decisions. Let’s take a delve into the advantages of remortgaging:
Lower Interest Rates
– One of the primary reasons to consider remortgaging is the opportunity to secure a lower interest rate. If your current mortgage deal has a high-interest rate and you’ve built up some equity in your home, you might be eligible for a more favourable interest rate when you remortgage. In recent months, mortgage interest rates in the UK in general have risen. Although they are coming back down, there will be many borrowers who are coming off of a relatively low interest rate, and will have to secure a new one that is unavoidably higher. This is why a mortgage broker is so important. They can help you to secure the most competitive and beneficial product for you at the time, and can help you to plan for when interest rates drop further.
Reduced Monthly Payments
– Lowering your interest rate can lead to reduced monthly mortgage payments. This means you have more disposable income each month, which can be used for other financial goals or to improve your quality of life. As we have already mentioned, many people will be coming off of a lower mortgage interest rate on to a higher one, and will inevitably be paying more for their mortgage. However, by securing a new mortgage product with your broker, you will avoid falling onto the standard variable rate and potentially paying rates of 7%, 8%, or even over 9%.
Access to Equity
– Over time, your home’s value may have increased, and you’ve paid down some of your mortgage balance. Remortgaging allows you to access some of the equity in your home, which can be used for home improvements, debt consolidation, or other investments. For example, let’s say that you originally purchased your property for £200,000 with a 90% mortgage of £180,000. After several years of paying back the loan and also making improvements to the property, you increase the value by £65,000 to £265,000. You could potentially then look at remortgaging the property and releasing some of the new equity that you have built up in the property.
Flexible Mortgage Terms
– When you remortgage, you have the opportunity to choose new mortgage terms that better suit your financial situation. You can opt for shorter terms to pay off your mortgage faster or longer terms to reduce monthly payments. Normally people tend to fix their mortgage deals for 2 or 5 years. After this fixed period has ended, you are free to re-structure and amend your mortgage terms to fit your circumstances at the time better.
– If you have other debts with high-interest rates, remortgaging can be a smart way to consolidate your debts into a single, more affordable monthly payment. When discussing something as delicate as debt, it is imperative that you discuss things with a financial advisor before making and decisions.
Pros and Cons of Remortgaging
Before you decide whether remortgaging is a good idea for you, it’s essential to consider the pros and cons or remortgaging:
- Lower Costs: Remortgaging can lower your monthly mortgage payments, which can save you a significant amount of money over time.
- Access to Equity: You can tap into the equity in your home for various purposes, such as renovations, education, or debt consolidation.
- Improved Mortgage Terms: You can negotiate better terms, such as a lower interest rate, which can make your mortgage more affordable.
- Debt Consolidation: If you have high-interest debts, you can consolidate them into a single, lower-interest mortgage, simplifying your finances.
- Financial Flexibility: Remortgaging gives you the flexibility to adapt your mortgage to your current financial situation.
- Costs and Fees: Remortgaging often involves fees and costs, including arrangement fees, valuation fees, and legal fees, which can add up. When you have your initial mortgage consultation with your broker, they can explain and run through any associated fees with you.
- Risk of Higher Rates: If market interest rates have risen since you took out your original mortgage, you might end up with higher rates when you remortgage. As we have mentioned, there are thousands of borrowers who will be coming off low interest rate mortgages that they secured years ago, who will unfortunately be going onto higher rate products. But, with the help of a broker, you can get the most competitive product on the market for your circumstances.
- Extended Repayment Period: For most people, the end goal of home ownership is to completely own a property debt free. By regularly paying your mortgage per month over the agreed time period, you will eventually clear your mortgage balance. However, If you remortgage and decide to opt for a longer mortgage term to reduce monthly payments, you might end up paying more interest over the life of the loan and of course, it will take longer to clear down the balance.
- Complex Process: The remortgaging process can be complex if arranging things on your own, involving paperwork and negotiations. Here is where professional mortgage advice can be invaluable. Your broker will arrange everything for you and make sure that the process is as smooth and pain free as possible.
Is It Worth Remortgaging Now?
Is it worth remortgaging now? In a market that fluctuates so frequently? Whether it’s worth remortgaging now depends on your individual circumstances and goals. If your current deal is coming to an end within 6 months, if you’re on a high-interest rate, have built up equity, and can secure a better deal, it’s likely worth considering. And simply exploring the option is not going to hurt. However, it’s essential to consult with a mortgage adviser to make an informed decision.
Is It Worth Remortgaging Early?
We’ve spoken about remortgaging when your fixed term deal comes to an end, but what about remortgaging before then? Many people decide, for a number of reasons, that they don’t want to wait until the fixed period is coming to an end. This can be to try and get a better interest rate, to release some equity sooner rather than later, or to re-structure their mortgage deal after events such as divorce. Now this is something that can be done, you don’t have to wait until the last few months of your remortgage, you can remortgage early. However, most lenders will charge an exit fee, sometimes called an early repayment charge, that you will be liable to pay if you end your deal early.
When you secure your mortgage in the first place, the lender will outline the fees and rules that they will apply and your mortgage broker will go through this with you. These normally range from around 1% to 5% of the outstanding balance. So for example, if you had a five year fixed product but wanted to remortgage at the 3 year mark, you could be liable for a 3% early redemption penalty. If you owe £250,000 for example, this would be £7,500. As mentioned, not all lenders will charge a fee and sometimes there are ways of working round this that your mortgage broker can potentially help you with.
Seeking Professional Remortgaging Advice
If you’re contemplating remortgaging your property and want to ensure you get the best possible deal, seeking advice from a specialist remortgage broker like Oportfolio Mortgages can simplify the process and provide you with several advantages:
Oportfolio Mortgages has extensive experience and expertise in the mortgage industry. Our knowledge of the market and lender offers can help you find the most suitable remortgage deal available.
Access to Exclusive Deals:
Mortgage brokers often have access to exclusive deals not available to the general public. These deals can include lower interest rates and favourable terms. As part of the PRIMIS mortgage network, our advisors at Oportfolio have access to over 90 different mortgage lenders and thousands of different mortgage products. Many of which can’t be accessed by other brokers or by going direct to the lender.
We tailor mortgage solutions to your specific financial needs, ensuring that the remortgage deal aligns with your goals and circumstances. We understand that no mortgage borrower is alike, and everyone has their own property ownership goals. So we treat every mortgage enquiry with the utmost attention and care.
Time and Stress Savings:
Navigating the remortgaging process can be time-consuming and stressful. As probably the biggest financial decisions you will make in your life, mortgages and remortgages can be tricky, if you don’t have the right guidance. A mortgage broker such as Oportfolio can handle the tedious and lengthy paperwork and negotiations, reducing your workload and allowing you to focus on the more important things.
Mortgage brokers can help you find cost-effective solutions, potentially saving you money over the life of your mortgage. By going it alone and choosing a product at random, without doing in-depth research and weighing up the options with a broker, you may choose a product that actually costs you much more. Similarly, by not doing anything at all and letting your mortgage fall onto the SVR can literally cost you hundreds of pounds more per month.
In conclusion, remortgaging can indeed be a good idea for many homeowners and every mortgage owner should seek some form of remortgaging advice at some point. The benefits, including lower interest rates, reduced monthly payments, and access to equity, make it a compelling option. However, it’s crucial to weigh the pros and cons of remortgaging carefully and seek professional advice for remortgaging tips, to ensure that remortgaging aligns with your financial goals. Oportfolio Mortgages can be your guide to remortgaging, and will simplify the process and help you secure the best deal for your unique circumstances. Don’t let the opportunity to save money and improve your financial situation pass you by; consider remortgaging today. Call or drop our team a message to see how we can help.