Why Re-mortgage

Re-mortgaging is where you take out a new mortgage on a property you already own. The most obvious reason to re-mortgage is to save yourself some money – possibly because your current deal has finished, and you’ve moved onto your lender’s expensive standard variable rate. However, there are also other reasons for considering a re-mortgage. 

Re-mortgaging for a Better Rate 

Switching to a different mortgage provider may involve paying a small exit fee to your current provider, or there may be an early repayment charge on your outstanding loan which could be as much as 5%. 

However, these extra charges could be worth the cost as you could save a huge amount of money switching providers for a better rate, particularly if your loan is still very large. 

Look into the rates other providers can offer and work out if you will be saving more money despite the charges you may have to pay to leave your current lender. 

Your Current Mortgage Deal is Ending 

Fixed rate, tracker, or discount mortgages tend to only have a term of 2 to 5 years before it reverts to the lender’s standard variable rate (SVR), which can be much higher and can cost you thousands over time. To avoid being transferred to the SVR, look for cheaper mortgages around 16 weeks before your current deal ends. 

Re-mortgaging to Beat Base Rate Rises 

All this uncertainty over Brexit does have a lot of lenders worried about how it may affect the Bank of England base rates.  With a variable rate mortgage, like a discount or tracker, your payments will increase significantly if the base rate continues to rise. You may want to consider switching to a fixed rate mortgage, so you know what you will be paying each month, at least in the short term. 

You Own More Equity 

The longer you pay into your mortgage the more equity you will have in your home. Therefore, you may have the opportunity to get a cheaper deal with a re-mortgage at a lower LTV (loan-to-value) ratio than your current mortgage. 

Borrowing Money on Your Mortgage 

You may want to release some equity in your home, whether it is to pay for repairs, upgrading a kitchen and/or bathroom, or to pay off other existing debts. Your current lender may have declined your request to loan more money. By switching mortgages, you may be able to release some equity at a cheaper rate. Your new lender will want to know why you are borrowing more money and may ask for evidence.

Release Equity for a Buy to Let

If the amount left on your mortgage is relatively small, re-mortgaging to release equity to purchase a buy to let is not a bad idea if you want to buy new property. The release of equity can be used to place a deposit on a buy to let, which may work out much more cost effective as a buy to let mortgage typically have high interest rates. 

The Value of Your Home has Significantly Increased 

The value of your property may have significantly increased – due to renovations or extensions – since you took out your current mortgage. This means that you could be in a lower LTV band and become eligible for lower interest rates. 

If you think this may be the case, get in touch with our expert mortgage advisors to find you a new rate.