Don’t make this huge remortgage mistake!
With the cost of living increasing, there has never been a better time to review your outgoings. As a homeowner, your mortgage is most likely the largest monthly bill you have so why would you not review it? Unfortunately, not everyone does review their mortgage at the end of their mortgage deal and just assume that they should just leave it to run for the entire mortgage term. This can result in you paying more, both in your monthly payments and in the amount of interest you pay overall.
Since December 2021, we have seen the Bank of England increase the base rate on 5 occasions and as a result, we have seen mortgage interest rates rise during 2022 so you need to be prepared.
If you’re looking to remortgage and want some expert mortgage advice, head over to our website.
What happens when your initial mortgage deal ends?
When your current fixed deal ends, if you don’t do anything, your mortgage rate will revert to the mortgage lender’s standard variable rate (also referred to as their SVR). This means that your monthly payments will increase or decrease each month because the standard variable rate is set by the mortgage lender themselves. Not only will your monthly payments increase, but they will fluctuate, unlike fixed deals where your monthly payments remain the same for a set period of time.
What are your remortgage options?
When you first took out your current mortgage deal, it is likely to have been for 2, 3, 5 years or perhaps even longer. When your existing mortgage deal ends, you have 3 options:
- Do nothing and let your mortgage revert onto the standard variable rate – this could be a costly mistake and the option we wouldn’t usually recommend.
- Stay with your existing mortgage lender and choose a new deal with them – this is also known as a product transfer.
- Move your mortgage to a new deal with a new mortgage lender – this is known as a remortgage.
Don’t assume your current mortgage lender will offer you the best deal!
Whilst it might seem appealing to stay with your current lender and simply switch to a new mortgage deal, don’t assume that it is the best deal for you and your current circumstances. A common misconception by homeowners is that your existing mortgage lender will reward your loyalty by offering you the best deals. This is not true so you should consider what other deals are available on the market.
Yes, it might be easier and the new deal on offer might seem appealing but even a small difference in interest rates can leave you paying more interest overall in the long run – remember, your mortgage is probably the largest debt you have so a bit of research can pay dividends. You want to be sure that what your current mortgage lender is offering you is indeed the best deal for you.
Can you do your own remortgage?
The simple answer is yes but do you have the time and tools to research and compare all the different mortgage deals available?
This is where we recommend using the services of a trusted whole of market mortgage broker. As an expert mortgage advisor, they will have access to a wide range of mortgage deals and interest rates and using their extensive knowledge, will be able to make sure you are choosing the best remortgage deal for your current circumstances. Thus, saving you time, effort and money and giving you peace of mind you have the right mortgage deal for you.
Once you are confident you are choosing the right deal for your remortgage, they will then support you through the process to make it as stress-free as possible for you. And if it turns out that your existing lender is offering the best deal for you, then they will be able to arrange that for you as well, leaving you free to spend your valuable time doing more of the things you enjoy.
More good news…
We should also tell you that you don’t need to wait until your existing deal ends to possibly take advantage of the lower interest rates being offered currently. Being prepared and starting to review your remortgage options early is key to avoiding paying unnecessary mortgage interest. Many mortgage lenders will allow you to secure a new deal up to 6 months in advance so you can potentially avoid higher monthly payments as a result of being transferred onto the standard variable rate at the end of your current mortgage deal.
By being prepared, not only will your new interest rate reflect the potentially lower interest rates available today, but you are providing sufficient time for your remortgage to be processed. Typically, a remortgage can take 6-10 weeks from starting the process to completion depending on the lenders and conveyancing timescales.
If your existing deal is ending this year, there is no time like the present to start looking at your mortgage options.
Tel: 01782 450050
*Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing mortgage lender if you remortgage early.
Thank you for reading our blog ‘What does a remortgage mean’.
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