Remortgages: 5 Things to Consider

Simply put, remortgage is when you decide to switch mortgage lenders or deals. In the United Kingdom, switching mortgages has become quite popular. the reasons for doing so include better remortgage rates, lender services and remortgage conditions or deals. Of course, before making the switch, you should consider these five important factors.

Arrangement Fees

When you decide to remortgage, the first additional cost that you will have to pay is the arrangement fee. Charged by the mortgage lender, this fee is usually paid when you availed of a discounted or fixed rate. There are banks that charge their customers arrangement fees as a standard practice even if they are not offering any special deals. You can choose to pay this fee up front or include the amount in your new loan.

Survey & Valuation Fees

Before your remortgage is approved, it is standard practice for the lender to perform a survey of the property, mostly checking its physical condition. For a more detailed survey, a Homebuyer’s Report is usually required by the lender. The report, which follows a specific format, contains information on the property’s heating and wiring system, evidence of subsidence and overall condition of the roof and walls.

A more comprehensive and thorough inspection is done with a Full Structural Survey. This survey is the most costly and covers all the property’s physical aspect. Payment for the survey and valuation fees can sometimes be shouldered by the mortgage lender as part of their special offer.

Interest Rates

One of the reasons that home owners are enticed to take out remortgages is because of the offers of lower interest rates. But before you count your savings, you must be sure that you will be paying a fixed or variable interest rate. Once you know, you should ask your mortgage adviser how much you will be exactly paying, to avoid surprises in the long run.

Fixed or Variable Rates

As their names suggest, fixed rates are interest rates that you agree to pay over a specific period of time. On the other hand, a standard variable rate means paying interest rates that are dependent on prevailing market conditions. Both these types offer certain advantages and disadvantages and you should scrutinize your finances to know which one suits you perfectly. Again, speak with your lender or mortgage adviser regarding options.

High Street Banks or Brokers

If you have a Country Court Judgment or CCJ on your credit report, some high street banks would not grant your application for a remortgage. You will have to wait until your CCJ is removed from your report before you will be qualified. This could take up to six years and you can not maximize your borrowing power during this time. Fortunately, there are specialist lenders who are willing to grant your remortgage application, for a higher interest rate. For the best remortgage deals, you can check out independent brokers.

Money Beacon can provide you with more details regarding remortgages. Simply click here and get a free, no obligation quote.