Strategic Mortgage Streamlining: Remortgaging Your UK Property

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For UK homeowners, remortgaging can generate substantial savings by allowing you to switch to a better mortgage deal. However, navigating the remortgaging process can seem daunting. This guide provides extensive advice on determining if remortgaging makes sense, choosing the right new deal, going through the application process, and optimising costs. Follow these practical tips to streamline your mortgage and maximise savings.

When to Consider Remortgaging

The first step is deciding if remortgaging is right for you. The prime times to review options include:

  • Mortgage deal expiring – Lenders usually offer lower rates for your initial 1-5 year deal period, after which the rate often jumps considerably. Remortgaging allows you to find a new competitive deal.
  • Better rates available – Even before your deal expires, regularly check the market for lower-rate deals that could save you money.
  • Home improvements – Remortgaging can release equity from the property to finance upgrades like extensions.
  • Credit score improvement – A higher credit rating opens access to cheaper deals previously unavailable.
  • Changed circumstances – Increased earnings or decreased outgoings may enable paying more off each month to reduce the mortgage term through remortgaging.

Remortgaging provides an opportunity to lock in savings and monitor the market regularly.

Assessing If Remortgaging Is Right

To determine whether remortgaging makes sense, weigh up:

  • Interest rate savings – Will the new mortgage rate reduce your monthly repayments by a worthwhile amount? Online calculators can estimate savings.
  • Early exit fees – Will the savings outweigh the charges for leaving your current mortgage before the end of its term?
  • Your plans – If you may sell soon, reprieve versus savings merit careful analysis.
  • Loan amount – Check if you can borrow more now by remortgaging based on your current equity. This may enable the consolidation of other debts.
  • Product features – Assess unique perks like payment holidays that may offset higher headline rates.

Crunch the numbers carefully, factoring in all costs over the mortgage term to identify your optimal route forward.

Choosing the Right Mortgage Deal

Once convinced remortgaging is beneficial, finding the optimal new deal involves:

  • Getting professional advice – A good broker simplifies the process and identifies suitable products based on your circumstances. Beware of advisory fees.
  • Comparing rates – Compare deals across multiple lenders. The cheapest rate does not necessarily offer the best value long-term once other fees are factored in.
  • Checking features – Look beyond rate alone at perks like payment holidays or overpayment flexibility that may benefit your situation.
  • Assessing types – Evaluate fixed, variable and tracker deals in light of rate predictions going forward to pick the right structure.
  • Reading the fine print – Check exit penalties, loan-to-value restrictions and application criteria to avoid surprises.
  • Including fees – Factor in arrangement, valuation and legal fees. These can vary substantially between lenders.

Finding a mortgage deal that balances lower rates with suitable features and affordable fees takes time and diligence. Rushing the decision could cost you a long time.

Streamlining the Application Process

To simplify your remortgage application:

  • Organise paperwork – Have income statements, bank statements, a budget outline and any home improvement receipts ready. This speeds verification.
  • Choose your timing – Avoid applying just before major life events like a wedding that could alter your financial situation.
  • Get lender pre-approval – Have your broker or lender do an Agreement in-principle assessment first to surface any potential issues early.
  • Inspect your property – Consider condition impacts on the valuation to avoid unexpected obstacles. Improve maintenance issues proactively if needed.
  • Check credit rating – Verify your score across agencies and address any problems. Enroll in credit-building programs if required to improve mortgage eligibility.
  • Declare everything – Fully disclose debts, credit applications, career changes and any HMRC disputes to avoid delays or declines later.
  • Use a broker – Brokers have direct lender relationships that facilitate smoother applications, saving you time and stress.

Preparation and diligence ensure your remortgage application proceeds seamlessly.

How to Optimise Remortgage Costs

While remortgaging often makes financial sense long-term, upfront expenses can be minimised by:

  • Avoiding frequent flipping – Limit how often you remortgage, as legal and arrangement fees get expensive if repeated too frequently. Try locking in two-year deals initially.
  • Negotiating fees – Many lender fees are flexible. Asking for reductions in valuation charges or free legals can lead to discounts, especially outside peak season.
  • Shopping conveyancers – Get quotes from a few recommended solicitors or licenced conveyancers rather than just your bank’s panel firm. Fees vary.
  • Timing completion – Coordinate with your old deal’s expiry date so you avoid paying interest on two loans simultaneously.
  • Paying upfront – Offer to pay arrangement and valuation fees outright rather than adding them to the loan. This minimises interest.
  • Cutting advisers out – If your situation is straightforward, consider applying directly to lenders rather than via a broker to avoid advisory costs.
  • Securing incentives – Take advantage of switcher cash incentives some lenders offer to draw new customers in.

Saving on remortgage costs requires shrewd comparison shopping combined with calculated timing around completion dates.

How to Assess the Right Loan Amount

When remortgaging, reevaluating the right loan amount matters too. Consider:

  • Your equity – Remortgaging may allow borrowing additional funds against the equity gained on your property. Assess affordability cautiously.
  • Value changes – Get an updated property valuation as local prices may have gone up or down since you first purchased.
  • Consolidating debts – Weigh the interest savings of rolling any credit card or loan debts into a lower-rate mortgage. Risks and fees apply.
  • Plans – If planning major renovations soon, build that funding requirement into the amount you remortgage to now to avoid an additional application process.
  • Monthly savings – With improved finances, could you overpay each month and reduce the term? Model various amounts borrowed against this capability.
  • Rental income – If renting out part of the property, factor in potential rental yields when assessing loan affordability.

Sometimes remortgaging necessitates revisiting not just the interest rate but also the optimal loan amount and term length.

Best Practices for a Smooth Remortgage

Follow these steps for a streamlined remortgage experience:

  • Review three months before expiry – This gives you a head start on researching new deals before rates change again.
  • Start paperwork early – Delaying forms leads to a rushed process. Give yourself ample lead time.
  • Get independent advice – While lender-tied brokers offer convenience, an independent broker may find you cheaper, better products.
  • Stick with reputable lenders – Avoid being enticed by deals from unfamiliar lenders with opaque fee structures or high exit penalties.
  • Don’t over-borrow – Be conservative when remortgaging to a higher loan amount. Unexpected costs or job changes could leave you stretched.
  • Check eligibility thoroughly – Even after pre-approval, read the terms closely to ensure you satisfy all criteria to avoid a late decline.
  • Fix a longer initial rate – Opt for a five-year fixed deal upfront to minimise refinancing costs down the line. You can switch sooner if rates fall again.

Careful planning and diligence ensure a smooth remortgage that secures the optimal new mortgage deal for your situation.

In summary:

  • Consider remortgaging when your deal expires, better rates emerge or circumstances change.
  • Crunch numbers on potential savings and costs. Weigh early exit penalties.
  • Scout for the best new deal based on rate, features, fees and your situation.
  • Prepare paperwork proactively. Use brokers to simplify applications. Timing is key.
  • Reduce unnecessary costs through timing, negotiation and shopping conveyancers.
  • Assess optimal loan amount in light of equity, debts and plans.
  • Start the process early and get independent advice for informed decisions.

With the right approach on how to remortgage your house, it becomes a straightforward process that could substantially reduce your long-term mortgage costs.

Concluding Thoughts

Remortgaging lets homeowners streamline their mortgage by switching to improved interest rates and better-aligned products as their financial profile evolves. While the administrative process can seem complicated, adequate preparation and expert broker advice simplify the journey. Crunch the numbers on projected savings and make an informed choice between mortgage deals to identify your optimal option. Manage costs through proactive planning. With diligence and timeliness, you can seamlessly remortgage your home to maximise value.

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