How to remortgage Could a remortgage deal save you money?

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Remortgaging can give you peace of mind

Switching mortgages, or remortgaging, involves moving from one mortgage to another. You don’t necessarily have to switch lender – if your current lender can offer you a better deal than is available elsewhere, you can simply switch to it.

Reasons to remortgage

There are four main reasons why you might choose to remortgage:

  • You've come to the end of an existing deal and don't want to pay your mortgage lender's standard-variable rate as it's higher.
  • You are on your lender's standard-variable rate and you want to switch to a fixed or capped rate, or simply a lower rate than you are paying.
  • To switch to a more flexible mortgage if you want to be able to alter the pattern of your payments.
  • To release equity in your property if its value has gone up.

Remember that there will be a limit on how much the lender will lend you based on your income and property value. It's difficult to borrow more than 90% of your property’s value in the current market. To get an idea of how much you may be able to borrow, try using the mortgage calculators offered by Which? Mortgage Advisers.

Is remortgaging worth it?

Don't just switch to the cheapest remortgage deal you see. You also need to think about what type of deal would best suit your circumstances.

To decide whether you could save money by remortgaging, you should take all switching costs into account. Visit the next page of this guide for more on remortgage costs.

The easiest way to work out whether you'll save money by switching is to use the Which? mortgage comparison tool.

To use it you will need to have the following information to hand:

  • Your current monthly mortgage payment.
  • The number of years left until the end of your mortgage.
  • The costs of switching from your existing lender.

For each of the deals that match your criteria, the remortgage comparison facility works out the estimated savings you'd make over the initial deal period by switching to them.

If you're borrowing more, you may be tempted to increase your term to keep your repayments manageable but you will end up paying more interest overall so think carefully before doing this.

Approach your own mortgage lender

Before switching to a new lender, contact your existing one and give it a chance to offer you a better deal. If you stick with your current lender you won't need a new valuation unless you're borrowing more and you won't need to pay legal fees.

You should seek independent mortgage advice as well as doing your own research before remortgaging to ensure you switch to a deal that is suitable for you. The Which? Group offers an independent mortgage advice service that looks at every mortgage from every available lender. Alternatively, visit Unbiased.co.uk to search for a broker.

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