When it comes to getting a new mortgage deal you may be asking about the practicalities of how to remortgage. That’s why we’ve put this article together to explain how to go about it and what preparation you should do. There are lots of steps you can take now that may boost your chances of your application being accepted. So read on to find out more.
1. Check your credit score
When you apply for a mortgage the lender will look at your credit rating. And the lender will use this information as a factor when deciding on whether to lend to you or not. It may also have a bearing on how much they’ll lend you and how much interest to charge too.
So it’s important to check your credit reports before you start the remortgage process. Credit reference agencies Experian, Equifax and TransUnion each hold a report on you and you can check them online for free. If there is anything incorrect in your reports it’s vital that you get these corrected. Also make sure you do everything you can to ensure your credit score is as high as possible such as by being on the electoral role and paying all your bills on time.
2. Don’t apply for credit just before you remortgage
When you apply for credit a ‘footprint’ is left on your report. And other companies will see this if you later ask them for credit. If there are too many of these footprints in a short period it can look like you’re in need of money or that you’re taking on too much borrowing. These can be red flags to lenders and could lead to them turning down your remortgage application. And if that happens, the rejection may then make it harder for you to get a mortgage elsewhere.
There are no set rules on how many applications are too many or how long you should leave before applying for credit again. Bear in mind these checks will be removed from your report after 12 months. And it’s likely that lenders will pay less attention to searches over six months old. Having credit checks on your report won’t necessarily result in you being turned down and some credit checks will have less impact than others.
But it’s advisable to be careful about what credit applications you make if you’re planning to remortgage.
3. Remortgaging tips: Plan ahead
When you’re looking for tips on how to remortgage it’s a good idea to start the process 3-6 months before your current deal ends. One benefit is that by securing a deal now you are protecting yourself against the threat of rate rises. Also, by having more time it means it’s more likely that you will switch from your old deal to your new one seamlessly and avoid rolling onto your lender’s standard variable rate which could be much more expensive.
4. Pick your remortgage date carefully to avoid fees
When you remortgage your lender may charge fees like an early repayment charge if you end your mortgage term early. So when it comes to remortgaging tips it’s essential to go through your paperwork and find out if this is the case. And this is where expert advice from a mortgage adviser can really help you. If you’re towards the end of your tie-in period they’ll make sure your remortgage date is timed so that you’ll avoid having to pay an early repayment charge.
If you’re in the middle of your deal it may still be possible to save money by remortgaging even if you have fees to pay. But again, an expert adviser will do the calculations for you so you won’t end up with any nasty surprises.
5. What’s your LTV?
When you’re looking at mortgages you’ll see the term LTV - loan to value ratio. This is a way of measuring the amount of money you’re borrowing compared to the total value of the property. Your LTV will be expressed as a simple percentage.
If you’ve been paying a repayment mortgage, and assuming the value of your property has stayed the same or risen since you took out your last mortgage, your LTV will now be lower.
And the good news is that having a lower LTV may mean you have access to more – and potentially better – mortgage deals. But to work out your LTV you’ll need to know how much your home is worth. If you’re not sure then put it on your remortgage checklist to look at what similar properties near you have sold for recently to get an idea. You could also speak to a local estate agent.
6. Sort out your paperwork
When it comes to your remortgage checklist it’s a good idea to dig out all your paperwork in advance to speed up the process.
You’ll need:
- Your last three months’ bank statements
- Your last three months’ pay slips and latest P60 form, if you’re employed
- Proof of any bonuses
- Two or more years’ certified accounts and SA302 forms or tax year overviews if you’re self-employed
- ID (usually a passport)
- Proof of address (such as utility bills)
7. How to remortgage? Get advice
Once you’ve done your preparation you’ll want to be sure you get the right mortgage. That’s where our team of experts can help you. Not only can they answer all your questions but they can help you choose the right mortgage for you and guide you through the process. So phone us today on 01603 405070 or click here to arrange a call back.
You may have to pay an early repayment charge to your existing lender if you remortgage.