A first-timer’s guide to remortgaging

If you own a property, it’s likely you’re paying off a mortgage. And while you may be happy with your current provider, there’s a good chance you could get a better deal or borrow extra funds by remortgaging with another lender.

The process isn’t complicated, but there are some things to look out for. Here’s the list of things you need to know.

The first thing to bear in mind is timing. Unless you like paying hefty penalty fees, it’s not always worth leaving your current lender until your mortgage deal is running out. To avoid paying penalties its recommended to start the process six months prior to your current deal ending.

To guide you through the process, you should use an independent mortgage advisor. As they’re not tied to any particular lender, they’ll be able to give you impartial advice and offer you mortgages from a range of lenders.

Then you’ll need to work out whether you want to switch provider (say, for a lower interest rate) or borrow money against your property. Either way, a prospective lender will send a surveyor to your property to work out its current value.

If you’re looking to borrow cash, how much you can get depends on the property’s ‘equity’– the difference between the size of your current loan and market value of your property. So, if you have a mortgage of £200,000 and the property is now worth £300,000 then that gives an equity amount of £100,000. The higher your equity, the better the rate you can borrow at.

On the subject of rates, always be aware that the deal with the cheapest repayment rates might not be the best. Most lenders will charge a booking fee, and you may find a reasonable repayment offer disguises an expensive fee. Always do your sums before settling on one in particular: an independent mortgage advisor can help you with this.

Once you’ve found a deal, your adviser can check with your current lender to see whether they can match it: if they do, you could have saved yourself money and a lot of time. Your independent adviser can still handle the transfer process for you.

When you’re confident of the deal you want, it’s a case of filling in the new application and working with a solicitor (often paid for by the lender) to arrange the transfer of funds and make sure everything is watertight.

After that, you can spend your money as you’d like or look forward to lower monthly repayments – until it’s remortgage time again.