When Should I Start Thinking About a Remortgage?

When Should You Think about Remortgaging? | 2 minute read 

If your mortgage is due to expire in the next six months—especially if you are on a three- to five-year, pre-COVID term—now is the time to consider remortgaging. You can either negotiate a new deal with your current lender or consider switching to a new mortgage provider.

It is well worth considering as without remortgaging, you will be automatically moved to your lender's standard variable rate (SVR). This tends to be higher than a fixed-rate deal, especially with the Bank of England's interest rate at a current high of 5.25%.

How soon can I secure a good remortgage rate?

As with everything in life (especially big financial decisions), it’s best not to leave remortgaging to the last minute. Lenders can secure a rate for a remortgage up to six months before the end of your current agreement, allowing you plenty of time to look around for the best deal.

Remember, you don’t have to stay with your current lender. If you find a better deal with a new mortgage provider, you can transfer your business to them without affecting that all-important credit score.

While remortgaging is much easier now, you still need to ensure that the process goes smoothly and is done in plenty of time before your current contract runs out. So, having all your paperwork in order and getting on top of the situation sooner rather than later is essential to avoid being automatically transferred to your current lender's SVR.

If you’re keeping an eye on the current interest rates or doing a more comprehensive search for a remortgage deal, take advantage of that six-month window. If you get your timing right, you can lock into a more attractive deal by remortgaging earlier when the rates are better.

Remortgaging comes with fees and additional charges. If your mortgage has an early repayment charge, remortgaging may also trigger it and add the equivalent of up to 5% of the outstanding balance.

Why should I think about remortgaging?

The idea behind remortgaging is to keep your monthly mortgage repayments as close as possible to your current deal. Being transferred onto an SVR means higher interest charges and a jump in monthly repayments.

Other reasons to remortgage could include a change in your financial circumstances, where you either need to reduce the amount you pay or increase your payments to clear your mortgage quicker without incurring any penalties. If your property has increased in value during the lifetime of your mortgage, you may be able to release equity and withdraw funds by remortgaging.

The best thing to do is speak to an experienced mortgage advisor about your current and possible future situation. Our expert advisors at Mortgage Matters Direct are here to guide you through the process and help you find a remortgage deal that suits you and your finances.

Sources: https://www.moneysavingexpert.com/mortgages/getting-ready-remortgage/