Re-mortgaging – Guide To The Best Deals

Step One: Evaluating Your Current Mortgage

1. Fixed-Rate Mortgages:

   • Opportunity for Savings: If you’re locked into a fixed-rate mortgage with a higher interest rate, you won’t automatically benefit from falling rates. Remortgaging can allow you to secure a lower rate and reduce your overall interest costs.

   • Cost Assessment: Before proceeding, evaluate the total costs involved in remortgaging. Consider any redemption penalties for early repayment of your existing mortgage, as well as arrangement or refinancing fees. Compare these costs with the potential savings from a lower interest rate to determine if remortgaging is financially advantageous.

2. Variable-Rate Mortgages:

   • Current Benefits: Variable-rate mortgages typically adjust with changes in the Bank of England base rate, so you may already be benefiting from lower rates. However, it’s worth exploring if there are more competitive rates available on the market that could further reduce your monthly payments.

   • Market Comparison: Research the current mortgage market to identify if better rates are available. Even with a variable-rate mortgage, you may find opportunities to switch to a more favorable deal.

Redemption Costs

• Early Repayment Penalties: When paying off your mortgage early, you may incur an early redemption penalty. This is commonly equivalent to one or two months' worth of interest payments. Ensure you factor these costs into your calculations when considering a remortgage.

• Fee Calculation: Include all potential fees associated with transferring your mortgage, such as valuation fees, legal costs, and arrangement fees, to fully understand the financial implications of remortgaging.

Improved Credit Profile

• Enhanced Financial Standing: If your credit rating has improved significantly since you took out your original mortgage, you may qualify for better rates now. Factors such as increased income, a higher home value, or accumulated savings can make you eligible for more attractive mortgage offers.

• Exploring Better Rates: If your financial situation has strengthened, remortgaging to take advantage of improved credit conditions could result in substantial savings. Compare available mortgage products to find the best rates and terms suited to your enhanced credit profile.

Conclusion

Remortgaging presents a valuable opportunity to reduce your mortgage costs by securing a lower interest rate, whether you are currently on a fixed or variable rate mortgage. By carefully assessing your existing mortgage, calculating the costs and potential savings, and leveraging improvements in your financial situation, you can make an informed decision that maximizes your savings.

Explore the mortgage market, consult with financial advisors, and utilize remortgage calculators to ensure that the benefits of remortgaging outweigh the costs. With a strategic approach, you can effectively capitalize on falling interest rates and optimize your mortgage terms.