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When should I re-mortgage my property?
There are many reasons to re-mortgage a property. Shopping around for a new rate, releasing equity or adjusting your financial situation are a few of them. Sue Taylor, Conveyancing Manager in WSP Solicitors Residential Property team looks at re-mortgaging and when you may consider these options.
What is re-mortgaging?
Re-mortgaging is the process of switching mortgage lenders to have a new mortgage replace your old one. You may be looking to adjust your financial situation as mentioned above or just looking for an improved rate on your current mortgage.
When should you start the re-mortgage process?
You can look into re-mortgaging when your fixed rate is due to expire. It is recommended by financial advisors that you start this process in good time, probably six months prior to expiry.
If you desire more flexibility and want the ability to pay off lump sums throughout the term of the mortgage thereby reducing the number of years, you may want to think about re-mortgaging.
If you are in debt and want to consolidate your outgoings, re-mortgaging is an option but if your credit rating is not good, you may be charged a higher rate of interest on the mortgage.
If you re-mortgage before the end of your fixed-rate term, you may have to pay early repayment charges so be mindful of this.
Tips for re-mortgaging
- You may have funds available and wish to reduce the amount of the mortgage so that you have a more desirable “loan to value” ratio, ie: increased equity in the property.
- If you have a variable-rate mortgage and want to budget your finances over the next few years, it may be worth looking into a fixed-rate mortgage (normally between 2 and 5 years). This would be prudent if it looks as though interest rates are going to rise in the foreseeable future
- There will be administration fees and arrangement fees to pay so these should be taken into account when deciding whether or not to re-mortgage. Some lenders will deal with the conveyancing free and the valuation fees. Others will not and this should also be taken into consideration.
- If you are going to rent out your property – your existing lender may agree but could charge a higher rate of interest. You could get a better rate of interest with a new Buy to Let mortgage.
Before re-mortgaging, you should seek advice from an independent financial advisor or mortgage specialist as they have the most information and access to all the current deals that are on offer to you.
Once you have decided to re-mortgage, we can help you with the process. Contact our Residential Property Law team here or by using the form on this page. Alternatively, you can call us on 01453 847200.