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BELFAST, CITY CENTRE: 028 9013 7392
BELFAST, EAST OFFICE: 028 9560 9410
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DROMORE: 028 9210 6060
LISBURN: 028 9279 4300
GLENGORMLEY: 028 9072 7636
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LURGAN: 028 3898 4004
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COALISLAND: 075 6180 7334
COOKSTOWN: 028 8673 1055

The Ultimate Guide to Remortgaging: Tips, Strategies, and Benefits

by | Jun 13, 2024 | Uncategorized | 0 comments

Welcome to The Mortgage Clinic Lisburn. If you’re considering remortgaging, you’ve come to the right place. This guide will walk you through when you might need to remortgage and how to secure the best deal.

What is Remortgaging?

When you buy a home, most people secure a mortgage to finance the purchase. However, this shouldn’t be seen as a one-time transaction. Instead, think of it as an ongoing financial commitment that requires periodic review and adjustment.

The initial terms of your mortgage deal usually only last a few years. Typically, these initial deals come with attractive interest rates, which are lower than the lender’s standard variable rate (SVR). Once this period ends, your interest rate will switch to the lender’s SVR, which can be significantly higher and can lead to increased monthly repayments.

To keep your repayments manageable and as low as possible, it’s often necessary to find a new mortgage deal every few years. This process of switching your mortgage from one deal to another is known as remortgaging.

Remortgaging allows you to take advantage of better interest rates, adjust your mortgage to fit your current financial situation, or even release equity in your home for other financial needs. It’s an essential strategy for managing your long-term home financing effectively.

Reasons to Remortgage With The Mortgage Clinic Lisburn

Remortgaging isn’t just for when your current deal is about to expire. There are several scenarios where remortgaging could be beneficial. Here are some common reasons why you might consider remortgaging with The Mortgage Clinic Lisburn:

  • Your Current Deal is About to Expire: When your initial mortgage deal ends, your interest rate will switch to the lender’s standard variable rate (SVR). This rate is typically higher and can fluctuate, leading to unpredictable and often higher monthly payments. Remortgaging before this happens can help you secure a better, more stable rate.
  • Improved Financial Circumstances: If your financial situation has improved since you first took out your mortgage—perhaps due to a salary increase or paying off other debts—you might qualify for a mortgage with better terms. This could mean lower interest rates and reduced monthly payments.
  • Increased Home Value: If your home’s value has significantly increased, you might be eligible for a more competitive mortgage deal. Higher home equity can often lead to better rates and terms.
  • Desire for a Different Type of Mortgage: You might want to switch to a different type of mortgage, such as moving from a variable rate to a fixed rate, capped rate, or tracker mortgage. Different mortgage types offer various benefits, such as more predictable payments or potential savings if interest rates fall.
  • Need for a More Flexible Mortgage: Your current mortgage might not offer the flexibility you need. Some mortgages allow you to make overpayments, underpayments, or even take payment holidays. These features can be very useful if your financial situation fluctuates.

Remortgaging can help you save money, adjust your financial plans, and ensure your mortgage fits your current needs. 

What are the Costs of Remortgaging?

When considering remortgaging, it’s important to understand the potential costs involved. These costs can vary widely depending on the terms of your current mortgage and the new deal you’re considering. At The Mortgage Clinic Lisburn, we aim to help you navigate these costs effectively.

One of the primary costs you might encounter is the arrangement fee. Similar to when you took out your initial mortgage, many remortgage deals come with these fees, which can be substantial and add significantly to the overall cost of remortgaging. Comparing these fees across different deals is essential to finding the most cost-effective option.

Another significant cost to be aware of is the early repayment charge (ERC) on your existing mortgage. This is a penalty for paying off your mortgage before the end of its agreed term and can sometimes amount to several thousand pounds. It’s crucial to check if your current mortgage has an ERC and understand its amount before deciding to remortgage.

In addition to the ERC, you will also need to consider exit fees, sometimes called exit administration fees. These are usually smaller charges levied by your current lender when you pay off your mortgage. While not as costly as the ERC, they still factor into your overall remortgaging budget

Valuation fees are another potential cost. When you remortgage, the new lender will often require a valuation of your property to ensure it’s worth the amount they are lending. Some lenders might offer free valuations as part of the remortgage deal, but others might charge for this service.

Given these potential expenses, it’s crucial to consider whether remortgaging will ultimately save you money. The Mortgage Clinic Lisburn can help you calculate these costs and determine whether a new mortgage deal is financially beneficial for you.

Is Remortgaging Right for Me?

Deciding whether to remortgage isn’t always straightforward. Even if your current deal is about to expire, there may be reasons to stick with your existing mortgage. Here are some factors to consider when determining if remortgaging is the right choice for you, with insights from The Mortgage Clinic Lisburn.

Firstly, consider the size of your outstanding loan. If your remaining mortgage balance is relatively small, for example, £50,000 or less, the costs associated with switching mortgages might outweigh the potential savings. In such cases, staying with your current mortgage might be the better option.

Another critical factor is whether your current mortgage has a significant early repayment fee. Large redemption penalties can make it more cost-effective to remain with your existing lender, despite the expiration of your initial deal. However, it’s worth checking if your current lender offers new deals with reduced charges, which could mitigate the impact of these fees.

Your loan-to-value (LTV) ratio also plays a crucial role in the decision-making process. If your equity is low—meaning you have a high LTV ratio, such as 90%—you might find it challenging to secure a better deal elsewhere. In such scenarios, improving your LTV ratio before remortgaging can open up more favourable options.

Changes in your personal circumstances are another important consideration. Even if your circumstances have worsened, it’s still worth exploring your options to see if any deals might suit your situation.

If any of these factors apply to you, it’s essential to discuss them with a professional. At The Mortgage Clinic Lisburn, we can provide tailored advice based on your unique circumstances, helping you make the best decision for your financial future.

How to Remortgage

Deciding to remortgage is just the first step. The process itself involves several key steps, and at The Mortgage Clinic Lisburn, we’re here to guide you through each one to ensure you get the best possible deal.

The first step is to assess your current mortgage deal. Look at when your current deal ends, what the standard variable rate (SVR) will be, and any penalties for early repayment. Understanding your current position will help you determine the urgency and benefits of remortgaging.

Next, it’s crucial to gather and review your financial information. Lenders will want to see your income details, outgoings, and any other financial commitments. Having all this information ready will make the remortgaging process smoother and faster.

The best way to decide on remortgaging is to consult with an independent mortgage adviser or an independent financial adviser (IFA) who specialises in mortgages. A mortgage broker can assess your current deal, consider your financial circumstances, and search the entire market to find the best deal for you. They can also alert you to any lock-ins or unfavourable aspects of potential new deals, helping you avoid future pitfalls.

Once you’ve chosen a new mortgage deal, the lender will usually require a property valuation. This step ensures that your home is worth the amount you want to borrow. Some lenders offer free valuations as part of their remortgage deals, while others may charge a fee.

Making the right choice at the right time can potentially save you thousands of pounds over the term of your mortgage. At The Mortgage Clinic Lisburn, we’re committed to helping you navigate the remortgaging process efficiently and effectively. Our expert advisers are here to provide personalised guidance and support every step of the way.

Take Control of Your Mortgage: Your Next Steps With The Mortgage Clinic Lisburn

Remortgaging can be a strategic move to manage your home financing more effectively, reduce your monthly payments, or release equity from your property. However, it’s crucial to carefully consider all the associated costs and benefits to determine if it’s the right decision for you.

At The Mortgage Clinic Lisburn, our goal is to make the remortgaging process as smooth and beneficial as possible for our clients. Our experienced advisers are here to help you understand your options, compare deals, and navigate the complexities of switching your mortgage. Whether you’re looking to save money, gain more flexibility, or secure a better interest rate, we’re here to support you every step of the way.

If you’re considering remortgaging or simply want to learn more about your options, don’t hesitate to reach out to us. Our team is ready to provide you with expert advice tailored to your unique financial situation, ensuring you make the best choice for your future.

Contact The Mortgage Clinic Lisburn today to start your remortgaging journey and take control of your home financing with confidence.

Helmut Elstner

Managing Director – Independent Mortgage Broker and Insurance Advisor

Helmut started working in financial services in early 2012 and founded The Mortgage Clinic in Belfast in early 2015. He specialises in all types of mortgages from First Time Buyer, Co-ownership, Self Build, Home Movers, Remortgages, Debt consolidation, to Buy to Let.

Three Best Rated Winner 2021
Winner Mortgage Broker of the year 2020
Top Rated Advisor 2021 on Vouchedfor