Re-mortgaging is when a homeowner transfers their outstanding debt to a different lender, usually because another lender offers a better interest rate.
Many mortgages are bought with an initial fixed interest rate period, meaning that your mortgage repayments remain the same for that specified term. However, once the fixed rate term is over, you may be left on a standard variable rate which means that the amount you pay every month changes based on fluctuations in interest rates.
If you are on a standard variable rate, then it may be worth your while to consider re-mortgaging as you might not be getting the best deal. By shopping elsewhere and renewing your mortgage with another lender, you can get a better deal and pay less interest.
When re-mortgaging, you will often be able to choose between another fixed rate interest term or you might opt for a Tracker Rate Mortgage. Tracker Rate deals rise and fall in line with the Bank of England’s interest rates so, at first, Tracker Rate mortgages can seem cheaper than a fixed rate plan, but the costs are likely to rise over time. Neither option is necessarily better than the other – it’s about picking the right plan for you. If you need some help or advice choosing your best option, then our friendly team are happy to help or talk through your options.
However, before taking steps to re-mortgage property, make sure you talk to your current provider about any exit fees you may be liable to pay so that you’re not left with an unexpected bill. It might also be worth asking your current provider if they can offer you a better interest rate, but be sure to check this against other providers to make sure that you’re getting the best deal.
Much like when you switch bank accounts with an overdrawn account, your existing mortgage provider will pass over your debt to your new lender. You will then pay the amount owed to the new provider, as well as any interest you owe, determined by the new interest rate you agreed upon.
Some mortgage providers have exit fees if you choose to re-mortgage and go elsewhere so make sure that you call them and find out what it will cost you to re-mortgage property. Your new provider shouldn’t charge for you to join but always check the small print of an agreement before signing up, just in case.
When you are looking to re-mortgage, deals online may seem to offer really good interest rates. However, it’s important to make sure that you read all of the small print before agreeing to a new deal as there may be hidden terms trapping you in a new mortgage agreement with variable or rising interest rates. Also, when looking for the best re-mortgage deals, you should take into consideration that not all comparison sites will give the same results so make sure that you use more than one to find the best deal.
What’s important when re-mortgaging is to get the best option for you. Our expert team are on standby ready to talk through the options with you and discuss your needs if you’re thinking of re-mortgaging – so give them a call today.
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