REMORTGAGE

Remortgaging is the process of borrowing money on a new mortgage to pay off an existing mortgage with a different lender. Where the new lender is charging a lower interest rate than the existing mortgage provider, you will save money. Although in practice it is important to look at all the costs involved, as any savings might be eroded by the fees involved with changing lender.

The term remortgage is also used to describe the process of raising additional funds against a property. This capital raising may be with the exiting lender or a new lender.

Nearly all mortgages have a headline offer that usually lasts for the first two to five years. Generally you should look to remortgage three months before the end of your current introductory mortgage rate. For example, if you have a five-year fixed rate mortgage, you should start shopping around for a new deal three months before the fixed rate ends.

In certain situations it can be advantageous to change mortgage deal within a introductory period, although early repayment fees will normally apply.

Generally speaking a remortgage can be completed in four to six weeks, although timescales vary widely depending on the lender, and the borrowers individual circumstances. Applications can often be expedited by providing all the relevant information and documentation requested promptly .

You can expect to wait longer for applications that involve third parties, this is especially true when dealing with equity loan providers, housing associations and leaseholders.

You can trust our expert team to push things through in the shortest possible time-frame.

Product fee – From £0 to £2000+ it varies from product to product, it can sometimes can be added on to your overall mortgage borrowing.

Estate agents fees – The cost of selling your property will vary widely, budget 1-3% of the property value.

Early repayment charges (ERC’s) – If you are on a fixed rate product and you are not ‘porting’ your mortgage this could be a significant added expense.

Booking fee – This is sometimes charged when you apply and is not usually refundable even if your application fails. Costs vary from around £100 to £250.

Valuation fee – The mortgage provider will instruct a survey to provide a realistic valuation of the property. This is done to ensure the property is worth the asking price and the amount you wish to borrow. This can cost between £150 to £300.

Telegraphic transfer fee – The cost of the mortgage provider to send the loan money through to your solicitor. This usually costs £25 to £50.

Mortgage account fee – This is an administration fee from your lender for setting up your mortgage. This usually costs around £100 to £300 and is actually paid when you repay your mortgage in full.

Mortgage redemption fee – This is the free to repay your existing mortgage if you are not ‘porting’ it to the new property, it is effectively the mortgage account fee.

Stamp Duty – This will vary depending on your circumstances and the value of the property being purchased. It also changes regularly so speak to your advisor to properly calculate this figure.

Buildings Insurance – Mortgage providers will insist that you have a buildings insurance policy in place in order to protect the asset (your home) that they are lending against. This can be around £150 a year, although its usually combined with some form of contents insurance pushing the figure to around £300 (depending on your circumstances).

Life & Critical Illness Cover – It is also essential to have insurance to ensure that your financial commitments, such as the mortgage, is covered should you die or be unable to work. Again, how much you pays depends upon your own personal circumstances, assets, wealth and health.

Survey fee – This looks at the condition of the property and lists work that needs to be done to maintain the value and safety of the property. It also looks at possible external influences on values such as nearby developments or such things one can’t see as former underground mines, possible rights of access. Expect to pay around £400 upwards for this kind of report.

Solicitor / conveyancing fees – For all the legal work (obtaining local reports, liaising with the sellers’ solicitor and your mortgage company and for expediting the financial transactions) expect to pay between £1500 and £2,000 to buy and sell.

Moving costs – As a first- time buyer it might well be that you don’t have a huge amount of stuff. In this case, you could save yourself a fortune by moving yourself and enlisting the help of friends, since a removal firm travelling around 50 miles could cost between £1,000 to £1,200!