Essential guide to remortgaging

In this episode, we discuss the basics of remortgaging; what remortgaging means and why you may need to remortgage are the most asked questions to mortgage advisers. Listen below to find out more.

Hello and welcome to this podcast brought to you from Charles Cameron, where today we will be exploring the world of remortgaging – why and when should you remortgage? What types of refinance options are there? When should you contact an adviser and What does an adviser do?
In this session we will cover the most important things you need to know and how we can support you with your current mortgage.

There are many reasons why you might need to consider remortgaging your property.

Firstly, and maybe the most common reason is that your initial mortgage deal is coming to an end.

Once your current mortgage tie-in period ends, you will be automatically switched to your lenders standard variable rate (SVR) – which could cost you £’000’s more each year than necessary. As you have probably read in the press recently, average SVR’s have topped 5% for the first time in 13 years – with some SVRs hitting almost 7%! *

On a £150,000, 20 year term, repayment mortgage, moving onto an example lender SVR of 6.74%, this monthly repayment would be costing £1,140 per month.

The same mortgage, on a 2 year fixed rate deal at 4.79% for example would be £973 per month –  a saving of £167per month or £2,004 per year.

According to industry figures*, over 1million mortgage holders are sitting on their lenders SVR and 12% of these homeowners believe their mortgage will be paid off quicker as they are paying a higher monthly repayment – not realising that the additional payment is purely interest and is not reducing the debt owed due to the higher interest rate – and a further 12% are concerned that they will be turned down for a new mortgage deal, so are avoiding talking to their existing provider.

The importance of independent whole of market advice from an expert adviser is crucial if you are within 6 months of your tie in period ending, in order to avoid more than you need to be.

Charles Cameron Advisers can source and secure the very best product for your circumstances at todays rates and they will monitor this to ensure your new mortgage is at the best rate possible and is in place from Day 1 of your current deal ending – saving you time, stress and money

If you already have a mortgage in place that was not previously arranged by an adviser at Charles Cameron, you can sign up for our new Mortgage Pledge with some basic details and we will start monitoring your mortgage for you straight away at www.ccameron.co.uk/mortgagepledge.

For every client that registers for the scheme – we promise to monitor your mortgage and one of our professional, independent advisers will review all of your options, to ensure a new mortgage deal is in place before you ever move on to your lenders Standard Variable Rate of interest.

With rising inflation, soaring energy costs, and rising bank of England interest rates, all of our clients are actively looking for new ways to save money. That is why we, at Charles Cameron, are doing everything we can to help!

A mortgage is one of the largest debts you are ever likely to have, therefore, if you arranged your mortgage with us previously, rest assured that we will be monitoring that mortgage and will never let you move on to a higher interest rate than necessary at the end of your tie-in.

Another reason you may need to remortgage is that your home may have significantly increased in value maybe due to market changes or works you have completed on your property for example. If the value of your home has increased you could fall in to a lower Loan to Value bracket meaning you could now be eligible for a cheaper interest rate – even if you are in a tie-in period it could be worth exploring your options with an adviser, even though you might need to pay an early repayment charge fee.

You may also wish to overpay on your mortgage and due to overpayment allowance restrictions, your current lender wont let you.

If you have received an inheritance or a large bonus and want to pay a lump sum off your mortgage but your current deal won’t let you or it will only let you make a small overpayment, Remortgaging will allow you to reduce the loan size and potentially get a cheaper rate.

Your adviser can help to work out any early repayment charges or exit fees you face and compare this to how much you may save with a new mortgage that could be lower.

If you currently have an interest-only mortgage and want to change to a repayment mortgage you might not actually have to remortgage as your existing lender should be happy to make the change for you. Depending on your lender’s criteria, you can even change part of the loan to capital repayment and leave some on your interest-only deal . However, if your current provider can’t help you with this, one of our advisers can look at the whole of market to see what option could be best for you.

As opposed to paying off a lump sum of your mortgage, you may wish to raise additional borrowing against your property for a number of reasons. This could be for some works you want to complete on your property, for personal reasons such as taking a holiday or buying a new car or maybe even to release money to provide a gifted deposit to allow children to get onto the property ladder themselves.

As we have covered, there are lots of reasons why you may need or wish to review your mortgage. This could be with your existing lender – known as a Product Transfer or by moving to a new mortgage provider – which is Remortgaging.

A product transfer with your current lender is where the terms of your mortgage remain the same and a new product from their range is selected for your mortgage to move onto once your current deal expires.

If there is a better deal on the market offered by a different provider or you wish to change the terms of your mortgage (i.e. the loan size or mortgage term), your adviser can help source the best deal for your mortgage and begin the process of applying for this with a different lender as a remortgage application.

Unlike a product transfer where your lender is already comfortable with your borrowing capacity for the property, for a remortgage the lender will need to do a valuation on your property, underwrite the case with supporting documentation on your income and expenses and instruct a solicitor to handle the legal work of moving the first charge of your property from your current lender to the new lender.

Here at Charles Cameron, we are here to support you with your current mortgage and you can book a consultation with one of our advisers Monday to Friday 8am – 8pm and Saturday 9am – 6pm. We will also plant 2 trees once your mortgage completes to support the environment too!

For more information on how to remortgaging, read our Knowledge Hub articles. 

You can now find our Mortgage Matters podcast on a range of podcast platforms, including  

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Don’t forget, our professional friendly advisers are on hand to support you and can help you explore all of your options. 

*As of February 2024, the average SVR is around 8%.