Remortgaging to prevent you entering your current lenders Standard Variable Rate (SVR) is an essential step to take to help keep your mortgage costs as low as possible in these uncertain times. Whether you’re looking to simply secure a lower interest rate than the SVR, release equity, or consolidate debt, remortgaging can help you achieve any of these things. In this guide, we will provide essential tips for financial success when considering remortgaging in 2023.
Why Consider Remortgaging?
Before diving into the process, let us help to explain why you should consider it. Here are some common advantages:
Lower Interest Rates
If your current mortgage deal is ending, you will likely be shifted to the SVR of your lender. This tends to be higher and is typically a margin above the Bank of England base rate. If you are planning on keeping your property then remortgaging will help you secure a lower rate of interest than the SVR.
Access to Equity
If your home’s value has increased since you first purchased it, you may have built up equity. Remortgaging allows you to access that equity and use it for other financial goals some of which are listed above.
Switching Mortgage Types
If you have a tracker rate or a variable rate mortgage and are concerned about future base rate increases, you may consider switching to a fixed-rate mortgage for stability in your monthly payments.
Things to Review Before Remortgaging
To ensure that you get the best remortgaging deals in the UK, you should consider certain factors of your financial situations before picking a product. These include:
Current Mortgage
Start by examining your existing mortgage terms. Note the current interest rate, monthly payments, and remaining balance. This information will serve as a baseline for evaluating new mortgage offers.
Credit Score
Your credit score plays a significant role in determining the interest rate and terms you qualify for. Before remortgaging, obtain a copy of your credit report. If your score needs improvements, work on it and resolve any credit issues.
If you require assistance with either of the above then our expert team of mortgage brokers at Visionary Finance can help review this information during their initial free consultation.
The Remortgaging Process
The process of remortgaging includes several factors. These include:
Look for Suitable Mortgage Products
Firstly, you have to find a mortgage option that suits your financial objectives and allows you to benefit from the process. You can contact your existing lender or explore other lenders and different deals.
Compare Interest Rates
One of the primary reasons for remortgaging is to secure lower interest rates. In 2023, with interest rates likely to fluctuate, consider the market conditions and future predictions. A fixed-rate mortgage may provide stability, while a variable or tracker rate may offer flexibility.
Calculate the Costs
Remortgaging comes with associated costs, including arrangement fees, legal fees, valuation fees, and possibly early repayment charges from your current lender. It is essential to calculate these costs and weigh them against the potential savings or benefits of remortgaging. In some cases, the cost savings may not justify the effort.
Factor in Loan-to-Value (LTV) Ratio
The LTV ratio is the proportion of your mortgage to your property’s value. A lower LTV ratio typically leads to more favorable mortgage terms. If your property’s value has increased since your original mortgage make sure you are securing the most competitive rate.
Consider Equity Release
If your property has appreciated in value, remortgaging can allow you to release equity. This can be used for home improvements, investments, or other financial goals. However, be cautious when accessing equity, as it increases your mortgage balance and may extend the repayment period.
Seek Professional Advice
Remortgaging can be a complex process, and it is often beneficial to seek professional advice. Look for a reliable remortgage broker in the UK. At Visionary Finance, we can provide expert guidance suited to your specific situation. Our experienced mortgage experts can also help you deal with the legal and financial aspects of remortgaging and ensure you make informed and profitable decisions.
