With the cost of living crisis and soaring inflation, we’re all trying to save on our outgoings so you may want to find out how to remortgage. That’s because you might be able to save on your monthly mortgage payments by remortgaging onto a better deal. Also, with the recent increases in interest rates, now may be a good time to lock in a new mortgage.
But how do you prepare for your remortgage? We explain what you need to know with these remortgaging tips.
1. Check your credit report
When you apply for a mortgage, the lender will run a credit check on you. So make sure you check your credit score first; you can do this with checkmyfile. And if your score is lower than you’d like you can take steps to improve it like registering on the electoral roll and making sure you pay your bills on time.
2. Beware of applying for credit before remortgaging
Think twice before applying for credit before you remortgage. That’s because whenever you apply for credit a footprint will be left on your credit file. And when you apply to another company in the future for credit, they’ll see these footprints. Too many of these footprints in a short period can be seen as a red flag by lenders and your mortgage application could be rejected.
However while there are no set rules on how many credit applications are too many it makes sense to be careful about what credit you apply for if you’re planning to remortgage.
3. Sort out your paperwork
When you remortgage you’ll need to supply a range of documents to the lender. These include:
- ID (this is usually a passport)
- Proof of address (like a council tax bill)
- Last three months’ bank statements
- Last three months’ pay slips and latest P60 form, if you’re employed. Plus proof of any bonuses
- Two or more years’ certified accounts and SA302 forms or tax year overviews for the self-employed
So when you're looking at how to remortgage, in order to avoid delays later on it’s a good idea to pull these together sooner rather than later.
4. Remortgage tips: Calculate your LTV
So what does LTV mean? Well it’s short for loan to value ratio and it’s a way of measuring the amount of money you’re hoping to borrow compared to value of the house. And your LTV is expressed as a percentage. If you’ve been on a repayment mortgage and assuming that your home has either increased in value or stayed the same since you took out your last mortgage, your LTV will now be lower.
The reason why this is important is because if you now have a lower LTV, you might be able to access more and possibly better mortgage deals. So when you're looking into how to remortgage don’t delay in working out how much your LTV is.
5. How to remortgage: Allow plenty of time
It’s a good idea to begin shopping around for a new deal if your current mortgage offer is due to end within the next few months. This is because you will be moved onto your lender’s standard variable rate when the initial period of your mortgage deal ends.
You can start the remortgage process up to six months before your current mortgage deal ends. Not only will you be able to lock in a rate but having extra time will reduce the risk of your rolling onto your lender’s standard variable rate if your remortgage takes longer than expected.
6. Watch out for any charges
If you end your mortgage term early you may need to pay an early repayment charge to your lender. So it’s a good idea to speak to an expert mortgage adviser to get their advice. If you’re coming to the end of your tie-in period, your adviser can set your remortgage date so that you’ll avoid having to pay the early repayment charge.
However even if you’re in the middle of your current deal your mortgage adviser can look at your remortgage options and consider any costs like an early repayment charge. Once they've done their calculations it may be that you could still save by remortgaging even if you will have fees to pay.
How to remortgage? We’re here to help
Whether you’re ready to remortgage now or you just want to talk through your remortgage options, we have a team here ready to help so please get in touch with one of our expert remortgage advisers today.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Where do you go from here?
You can make an appointment to talk to one of our friendly mortgage experts, either in person or on the phone, at a time to suit you.
You can contact us now on 0300 303 0913 and speak to one of our team right away.
You can fill out our quick enquiry form to request a callback.