Can You Remortgage At Any Time? Here’s What You Need To Know
Can You Remortgage At Any Time? Yes, you can re-mortgage at any time. This is because a re-mortgage is simply a new mortgage agreement that replaces your old one. This means that you can take out a new mortgage at any time, regardless of whether or not your old one has expired. There may of course be penalties if the term of your current agreement has not yet expired.
What Is Re-mortgaging And Why Would You Want To Do It
Re-mortgaging is the process of switching your mortgage to a new lender, in order to get a better deal. This can involve either moving to a new mortgage with your current lender or switching to a new mortgage provider altogether. There are a number of reasons why you might want to re-mortgage, including:
– To get a lower interest rate: If interest rates have fallen since you took out your original mortgage, you could save money by re-mortgaging to a new deal with a lower rate.
– To reduce your monthly payments: If you’re struggling to keep up with your monthly mortgage payments, re-mortgaging to a longer-term deal could reduce your payments and make them more affordable.
– To release equity: If your property has gone up in value since you bought it, you could release some of the equity by re-mortgaging and borrowing more money against the value of your home. This can be useful if you need to make home improvements or consolidate other debts.
– To switch from a variable rate to a fixed rate: If you’re on a variable interest rate mortgage and are worried about rates rising in the future, you could switch to a fixed rate deal which would give you certainty over your repayments for a set period of time.
Before deciding whether or not to re-mortgage, it’s important to compare the deals on offer and make sure that you’ll actually save money by doing so. It’s also worth bearing in mind that there may be costs associated with switching mortgages, such as arrangement fees and early repayment charges.
How Does Re-mortgaging Work
When a homeowner wants to change the terms of their mortgage, they will need to go through the process of re-mortgaging. This usually involves taking out a new mortgage with different terms, but it can also involve switching to a different lender. The first step is to contact a mortgage broker or lender in order to get an idea of what options are available. Once the homeowner has found a suitable mortgage product, they will need to fill out an application and provide documentation such as proof of income and employment history. A re-valuation of the property will be required to assure equity if you are switching lenders.
If approved, the new mortgage will be set up and the old one will be paid off. It is important to note that there may be fees associated with re-mortgaging, so homeowners should compare costs before making a decision.
The Benefits Of Remortgaging
There are several potential benefits to re-mortgaging. For instance, you may be able to reduce your monthly payments, or you may be able to borrow additional funds for home improvements or other purposes or extend or lower the terms of the borrowing depending on your financial plans.
Perhaps the commonest reason to re-mortgage is to try and lower the monthly repayments or to secure lower payments over a long-term if you fear rising interest rates. You might, for example, be able to take advantage of a low-interest rate offer you have spotted – particularly if rates have changed since you took out your original mortgage. So if you’re looking to save money on your mortgage, re-mortgaging could be an option worth considering.
Loan To Value (LTV)
When you apply for a mortgage, the loan-to-value ratio is one of the key factors that lenders look at. This is because it gives them an idea of how much of a risk you are as a borrower. Re-mortgaging sometimes enables you to leverage the fact you have a lower LTV. The loan to value ratio is simply the size of your mortgage in relation to the value of your property. For example, if you have a mortgage of £100,000 and your property is worth £200,000, your loan to value ratio would be 50%. The higher the loan to value ratio, the greater the risk to the lender.
You can calculate your LTV by the following steps:
- Divide your outstanding mortgage amount by your property’s current value.
- Multiply the result by 100
If you’re thinking of re-mortgaging, it’s important to keep in mind that your loan-to-value ratio will be taken into account by the lender. So if your property has gone up in value since you took out your original mortgage, you may be able to re-mortgage to a better deal with a lower loan-to-value ratio and therefore less risk for the lender.
The Risks Of Re-mortgaging
When people are considering re-mortgaging, they often focus on the potential benefits — such as lower monthly payments or accessing the equity in their home. However, it’s important to be aware of the risks involved in re-mortgaging before deciding. One of the biggest risks is that you could end up paying more in fees and charges than you save in interest. Fees include: legal, re-valuation and administrative.
Overall charges may particularly be more if you switch from a fixed-rate to a variable-rate mortgage, or if you extend the term of your loan. Another risk to be aware of is that you could end up with a less favourable interest rate than you currently have. This is because lenders usually offer their best rates to new customers. Finally, if you’re planning to sell your home in the near future, you may not recoup the costs of re-mortgaging when you sell. For these reasons, it’s important to carefully consider the risks and the potential benefits of re-mortgaging before finalising their decision.
When Is The Best Time To Re-mortgage?
Many homeowners choose to re-mortgage in order to get a better deal on their home loan. However, timing is important when it comes to re-mortgaging, as there can be significant costs involved. Homeowners should therefore consider a few factors before making the decision to re-mortgage. One important factor is the interest rate. If rates are low, it may be a good time to refinance in order to get a lower monthly payment. Another factor to consider is the term of the new loan. If the term is shorter than the remaining term on the current loan, the homeowner will likely pay more in interest over the life of the loan. Finally, homeowners should also be aware of any prepayment penalties that may apply to their current loan. These penalties can add up quickly, so it is important to factor them into the decision to re-mortgage. By taking all of these factors into consideration, homeowners can make an informed decision about when the best time to re-mortgage their home is.
How To Go About Re-mortgaging
If you’re thinking about re-mortgaging your home, there are a few things you need to keep in mind. First of all, who is eligible for a re-mortgage? In most cases, you’ll need to have at least 20% equity in your home before you can apply. You’ll also need to have a good credit score and a steady income. Once you’ve checked that you meet the eligibility requirements, it’s time to start the process. The first step is to shop around and compare rates from different lenders. It’s important to consider more than just the interest rate – you should also look at the fees and charges associated with each loan. Once you’ve found the right loan for you, it’s time to fill out an application form. This will usually include some financial information about yourself, as well as details about the property you’re looking to re-mortgage. Once your application has been submitted, the lender will carry out a valuation of your property. If everything goes ahead, you should get the keys to your new loan within a few weeks.
Early Repayment Charges
When you take out a mortgage, you agree to make regular payments over a set period of time. However, if you want to pay off your mortgage early, most lenders will charge a fee. This fee is known as an early repayment charge, and it is designed to cover the cost of losing interest from your mortgage. Early repayment charges can vary depending on your lender, but they are typically around 1-2% of your remaining mortgage balance. Therefore, it is important to weigh up the cost of an early repayment charge against the savings you will make by paying off your mortgage sooner. If you are planning to sell your property or move house in the near future, it may be worth paying the early repayment charge in order to avoid paying interest on your mortgage for longer. However, if you are happy with your current home and do not plan on moving anytime soon, it may be better to keep making regular repayments until your mortgage is paid off in full.
Refusal
It can be very frustrating to be denied a re-mortgage, especially if you were counting on it to help you achieve your financial goals. There are a few different reasons why your application might be rejected, but the most common is simply because you don’t meet the lender’s criteria. Maybe your credit score isn’t high enough, or perhaps your income isn’t high enough to support the new loan. Whatever the reason, it’s important to remember that there are other options available to you. You may be able to find another lender who is more willing to work with you, or you could explore other financing options such as a personal loan. Whatever you do, don’t give up on your dreams just because of a single rejection.
Summary
If you’re thinking about re-mortgaging your home, there are a few things you need to keep in mind. First of all, who is eligible for a re-mortgage? In most cases, you’ll need to have at least 20% equity in your home before you can apply. You’ll also need to have a good credit score and a steady income. Once you’ve checked that you meet the eligibility requirements, it’s time to start the process. The first step is to shop around and compare rates from different lenders. It’s important to consider more than just the interest rate – you should also look at the fees and charges associated with each loan. Once you’ve found the right loan for you, it’s time to fill out an application form. This will usually include some financial information about yourself, as well as details about the property you’re looking to re-mortgage. Once your application has been submitted, the lender will carry out a valuation of your property. If everything goes ahead, you should get the agreement to your new loan within a few weeks.
It is important to remember that re-mortgaging can have an impact on your credit score. So if you’re planning on re-mortgaging in order to get a better interest rate, make sure that you’re confident that you’ll be able to repay the loan in the long run.
Conclusion
In conclusion, re-mortgaging your home can be a great way to save money on interest payments or to release equity from your property. However, it’s important to make sure that you are eligible for a re-mortgage and that you compare rates from different lenders before you apply. Once you’ve found the right loan for you, the process is relatively straightforward and you should receive the keys to your new loan within a few weeks.