There are a number of reasons why you may choose to remortgage. The main reason for most people is that they can save a lot of money on their mortgage payments each month. This reduction comes about when you remortgage with a lower rate as you will be paying less interest overall. A remortgage may also extend the period that you are paying the loan over which means that while your monthly payment is lower, the amount of interest that you pay overall will increase. Read More >>
What Do I Need To Think About When Remortgaging?
Remortgaging is not a decision that you should take lightly. You certainly need to think carefully about the pros and cons of a remortgage. For example, if you want to remortgage to a lower rate to save money. Have you considered if there are any fees to pay when you pay off your current mortgage. When these fees are taken into account then you may not actually be saving as much as you think.
If you are considering using a remortgage to consolidate your debts then there may be other methods of borrowing that are more suitable. The same can be said for remortgaging to pay for home improvements. A remortgage is likely to be repaid over a period of at least twenty years. There may be other loans with slightly higher interest rates that can be repaid in half this time. If you state that the reason for your loan is debt consolidation or home improvements. Then the lender may ask for proof that this is what the money has been used for.
A remortgage application is treated the same as a first mortgage. So there will be vigorous checks that are carried out by the lender. They will want to know that you can afford the repayments even if your circumstances were to change. They will look carefully at your income and expenditure. You may be required to answer a number of questions about your financial situation. This is something that you should prepare yourself for.
How To Apply For A Remortgage
If you have done all your research and have decided that a remortgage is the best option for you, then the next step is to make an application. This may be able to be done online initially but there is a good chance that the lender will want to speak to you either on the phone or face to face. Depending on how much they want to ask you, you may need to speak to them more than once.
The lender will want to go through all your finances carefully and so you should be prepared to go through this in fine detail. You will be asked to produce documentation such as wage slips, bank statements and utility bills. It can be useful to prepare your own budget before an application has been made. You should also find details of all payments that you make on a regular basis. If it looks as if your budget is tight then you should think of ways that you can reduce your outgoings so that the remortgage is more affordable.
It might be a good idea to check your credit file before applying for a remortgage. The lender will check your credit report and so it can be useful for you to know what your report is like. If there is something on there that you think is a mistake then you can ask for it be removed. There may also be old accounts that you have forgotten about which can be closed before your application is made.
It can take a couple of months for your application to be approved. Therefore you should start the application process in good time before your current deal comes to an end. This being said, there is no need to panic if you have less time than this as it will just mean that you may have to pay a higher rate for a month or two until your application for a remortgage has been accepted.