What is the true cost of remortgaging?
Last month, the Bank of England cut the bank rate to a record low of just 0.1% - something that’s never been done before. This was introduced to help protect the economy as much as possible from the impact the coronavirus will have.
Whilst this isn’t great news for savers, as they won’t get much return for their hard-earned money now, it’s come as a great opportunity for existing homeowners to save money by remortgaging.
With many either finding themselves on the government’s furlough scheme, having hours reduced or being made redundant, it’s understandable if you’re worried about your financial situation.
For most people, your biggest monthly expenditure will be your mortgage payments, so if there’s a chance to potentially save some money here, even if your finances haven’t been affected by covid-19, then surely it’s worth looking into?
Whilst it’s true that the number of purchases has declined since the outbreak of coronavirus, as people aren’t moving house or buying their first homes at the moment, remortgages are very much still business as usual. Remortgages are still able to go ahead as they don’t require a physical visit to the property. Instead, they use market data to estimate the value - clever isn’t it?
Many choose to wait until their fixed rate deal is near the end before they look to remortgage. However, while it’s important to remortgage before your fixed rate ends, as you don’t want to fall onto a standard variable rate (SVR) and end up paying even more, you also don’t have to wait until your fixed rate ends before you can think about remortgaging - you can do this at any time.
If you’re going to remortgage before your fixed deal comes to an end, just be aware that you may have to pay an early repayment charge. This might outweigh the benefits of remortgaging, or it might still be worth going ahead, depending on your individual circumstances, but your mortgage adviser will be able to weigh this up for you and make a recommendation.
Due to recent changes to the housing market, some lenders will only lend up to 75% of a property's value now. If you haven’t built up enough equity in your home - perhaps you’ve not lived there for very long - then you might not be able to remortgage with a particular lender.
However, it’s worth getting in touch with us as we still work with many lenders, so we’re perfectly placed to find the right mortgage for your circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.