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A step by step guide to remortgaging

Check your current mortgage doesn’t hold penalties for early repayment or exit fee

Many mortgages will hold a charge for an early exit, especially during an offer period where you have been given a special discounted rate. If there is such a charge attached to your current mortgage you will need to add that cost to the list of expenses involved in changing lenders. Only if the money you are going to save by moving can accommodate all associated expenses and still leave you financially better off should you consider the move.

Find out the equity held in your property

The equity in your home is the amount you own against the amount you need to borrow. The greater equity you hold the more likely you are to be able to be offered a preferable interest rate.

You will need 5% equity to receive any mortgage. The difference in interest rates you will be offered for levels of equity held between 10% and 20% are substantial and if you hold over 40% then that’s where the best deals will become available.

If you can add to the equity amount in your home this could help you secure better rates. Do you have savings you can spare? Or valuables you could sell to help pay towards your property purchase?

Your loan to value rate (LTV) dictates the interest level your lender will offer you. If you are close to the threshold of a lower rate you should consider if it’s possible to find the extra capital required to reach it or even by waiting a little longer paying into your existing mortgage until you reach that next level.

Explore the market for a new deal that suits you

Check all available options to find the most suitable deal for you.

Comparison websites such as The Loans Department will offer a wide range of remortgaging deals from an equally wide range of lenders. They’ve done so much of the work for you already so use them. Some lenders are only available through a particular comparison site so make sure you run your figures through as many of these websites as possible in order to give you a more complete choice and a better chance of not missing the perfect deal.

Mortgage brokers are industry specialists so it makes sense to utilise their insider knowledge. Often they will be able to offer special deals or terms that aren’t available anywhere else on the market due to their relationships with specific banks or lenders. Their advice shouldn’t cost you a penny so setting up a meeting should be on your list of priorities.

Independent searches on and offline. Some banks and lenders won’t affiliate with any comparison websites and will only offer their facilities directly to the customer, so it pays to spend some time making your own remortgage searches both on the Internet and over the phone or in person.

Financial advisors, like mortgage brokers, are specialists in this field. Their job is to get the best from your money so once again, make an appointment to see if they can offer you a better deal or a way through your current situation. It might not even be a change in mortgage they suggest to be what’s best for you in your current situation. They are available to discuss ways to save money and to use the money you do have in the most efficient manner.

Check your credit score

All loans and credit applications are dependent on your credit score —mortgages are no different, so check your credit report to see how your credit health looks. If there are areas where you can improve on then this could help you reach the deal you’re looking for or to secure an even better deal than you would be offered at its current standings.

Improving your credit score takes time so it’s important to look into this the moment you start considering remortgaging might be right for you.

Consider the terms of the new mortgage including all fees

As well as any exit, early repayment or administration fees, you should add all additional expenses to the cost of moving lender and weighing up if it’s still the right move to save you money.

You will need to pay a lawyer, solicitor or legal specialist to carry out the changes and organise the official paperwork. You may also have to pay a fee in releasing the property deeds to the solicitor. Other additional costs could include re-evaluations and searches to be made on the property to satisfy the new lenders terms and conditions.

All additional costs need to be considered when remortgaging. Moving your mortgage might not look so advantageous once you’ve paid all the associated costs.

Ask your current lender to match the new deal

Once you’ve found a new mortgage that suits your needs it is always worth approaching your existing lender with the new terms to see if they’re willing to match them.

Any lender is in the business of making money so will be reluctant to lose a customer already paying into their system. The money you will save in legal fees, transfer costs etc. will be a great saving, not only financially but in the time and efforts associated with changing lender.

Complete your application

There will be an application from the new lender to complete. They will require legal documentation to prove your identification and also some extra information such as recent payslips, a P60 and the paperwork of your current mortgage.

Instruct your solicitors or lawyers

You should have sought out a legal representative by this point making sure they offer you the correct service at a suitable price. Your new lender may have preferable solicitors or licensed conveyancers or you may choose to use your own.

They will make the legal request to your present lender to supply the property title deeds as well as the final redemption figure. This figure should be the amount previously instructed as the full balance to pay, including any fees, to exit the mortgage.

They will also make all the necessary legal searches that are required before they can call for completion.

Your solicitors or lawyers will then organise a completion date with all parties.

Once this is taken care of you will be asked to sign the mortgage deed and a report will be issued to the new lender confirming you have received the property title and it is safe for the lender to supply the new mortgage.

Your new lender will pay off your existing mortgage

Once all details have been surrendered your solicitor or lawyer will organise the completion of payment from your new lender. Your existing mortgage will be paid in full and your new mortgage arrangement will begin.

If you are arranging a remortgage to release capital your solicitor or lawyer will release them to you at the time of completion.

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