If you have decided to Remortgage, there are two options – one is to stay with the existing lender and another is to go with a new lender, if you are not comfortable with current and want to switch.
There are all the chances that in the first case before your term comes to an end, the lender himself would call you and know about your intentions or the other way is to contact the lender and intimate your intention. However, you need not stick to it as there are ample of lenders standing on the way. At the end of the day, it is their business.
If you are confused about with whom to get associated with in the long list of lenders, you have another helpline available which is of “
Mortgage Brokers”. You need not worry about the integrity of mortgage brokers as they are duly controlled and regulated by Financial Services Authority, which ensures that they are bound by law to deal with customers fairly. The benefit attached with mortgage brokers is that they have better knowledge about the market rates and market participants and they have access to special products which are otherwise not available to the normal customers. For all its services, the broker would definitely charge and you need to factor in this expense before entering into agreement with them.
Here we would cover certain important points on the
remortgage deal which would answer all your queries. The below discussion also brings out what are the things that you need to be aware of and what are the factors you should consider while entering a remortgage transaction.
Deals Available and Suitability to Requirements
There are so many
remortgage products available with different features and benefits. Products like - fixed rates, flexible rates, capped rates and base rate etc. You aim should be to ensure that the lender or a broker explains all the benefits and costs of the product to you. You should not just look at the rate perspective of the loan but there are other factors as well.
Interest Rates: Types and Caution
The key factor to consider before a remortgage deal is the interest rate charged by the lender. Not only the interest rate but also whether the rate is fixed or a floating one and the information like that.
Per Month Savings
Ultimately the savings which are done due to the deal is one of the most important. First of all, you should ask your lender or broker to explain how you would save by opting to
remortgage. You should justify first that the deal is better deal. Of course, if you are increasing your loan amount, you may get more monthly installment and in that case you need to analyze the case accordingly.
Check the (SVR)
If you are running fixed rate loan and now proposing to flexible rates. Comparing rates would not make sense. In such a situation, what can be done is that the fixed rate offered by the proposed lender can be compared to your existing rate to know how competitive your lender is. You can also compare it with the SVRs charged by other lenders to have a fair idea whether the deal that you are choosing is competitive or not.
Monthly Obligation Amount
You should ask your lender or broker to specify exactly the payments to be made every month at the quoted rate of interest. Along with this information you should also ask about your payments if it were the standard variable rate to clearly understand total amount you would end up paying at the end of the tenure.
Know about Annual Percentage Rate (APR)
With the headline mortgage rate, the annual percentage rate (APR) should also appear in all adverts. A true picture of the cost of the loan is presented by annual percentage rate (APR) and it also assists in comparison.
Prepayment Charges or Penalties
This is a trend that most lenders keep prepayment charges in their agreement to keep or to create barrier for customer to change the lender. These charges are generally very high. Prepayment charge is an important factor to be taken into consideration before entering a
remortgage deal, as it may eat away whole profit of having a reduced rate remortgage deal. Another thing to keep in mind is the period up to which you are liable to pay such prepayment charges. For example if you switch to another lender within a period of one year you will have to pay the charges. Here, one year is the period before which you cannot change. This could be termed as the lock in period in other words.
Processing Fee
To find out the net benefit out of a mortgage deal we have to reduce our benefits by the amount of processing charges to be paid for remortgage. They may be to tune of £800. Some mortgage lenders may waive away the processing fee or reduce it. In that case proper negotiation may definitely help make the deal efficient.
Turn Around Time (Processing Time) for Sanction
Suppose you require the loan in 15 days time and processing time of the lender is more than a month, then it is useless to keep the lender in your options. In urgency, you may have to pay extra. That much cost the urgency always would carry. So ultimately the decision is to be made as to bear the urgency cost or waiting is not a problem.
Number of times remortgage is possible
There is no doubt in the fact that you can have mortgages as many times as you require, but note that the early repayment fee has to be born. You need to check the financial viability before entering into a deal.
