For many, a remortgage can be a good option if they are considering freeing up some money. It offers a chance to consider the rate that is being paid and look for something that is more attractive. It can also be a time to consider taking a little extra on the mortgage in order to do some work on the property or even extend it to make it more suitable for a growing family.
Remortgaging isn’t, however, always the best solution, so lets take a look at some of the things that you should consider when you are looking at remortgaging.
Research your options
You don’t always have to remortgage with your current lender. If you want the best deal, it really is worth shopping around to find the right mortgage deal for your needs. This means not only considering the mortgage rate but also the term that you choose at that rate. All of this will affect the amount you will pay each month, and this is also something that you may need to factor into your decision. Think about when your current rate will run out and give yourself plenty of time to research all the alternatives that are out there. Ideally you should start this around 3-6 months before your current rate runs out.
Consider your credit score
Your credit score is full of important information that mortgage companies will use to determine the likelihood that you will be able to repay your mortgage. It includes details about past credit cards, overdrafts, loans and bills and affects the deals you will be able to access. If you have a strong credit score, then it will show lenders that you are more likely to pay back the mortgage, making you a good mortgage candidate. A weaker score may give them cause for concern and may reduce the number of mortgage options that you can look at.
You can help your credit score in the months before you look for a remortgage by not taking credit and making sure that you pay with credit cards and bills of promptly and on time.
Think about your timing
When you apply for a remortgage, you need to consider your timing. Do it whilst there is still too long on your current mortgage and you may find yourself paying exit fees, do it after your current rate has ended and you may find yourself paying a new higher rate with your current lender. This could end up costing you quite a bit extra.
You will also need to think carefully about how many lenders you approach as multiple credit checks in a short period of time can have a negative effect on your credit score. An agreement in principle is a way of negating this whilst still checking if a lender may give you a mortgage.
Once you have found your new mortgage you will need to time your switch correctly in order to avoid an early repayment charge which could be costly.