Remortgaging

Are you paying over the odds for your mortgage each month?

If you consider that you are paying over the odds for your mortgage each month, then switching mortgage provider could be an option to help you save some money. If you are currently paying your lender's standard variable mortgage rate, there could be lower rates available from other providers.

You have to do the sums to make sure that what you gain through switching provider is not lost through higher charges. The first step is to check the terms and conditions of your existing mortgage.

It’s important to find out if you are tied-in to your mortgage deal and if there are any redemption penalties or early repayment charges. You must decide if it is worth switching if you are locked-in to a different rate or to remain until the penalties have expired.

If appropriate to your situation, the process should take about a month to complete. You will receive a mortgage offer of advance, if the lender's surveyor is satisfied with the value and condition of your home. Your new lender will liaise with your existing company and once you have received a completion statement from your solicitor or new lender, the process is completed.

The four main mortgage types are; fixed, capped, discounted and flexible.

Fixed-rate mortgages
These can be ideal if you require the certainty of knowing what your monthly repayments are and prefer to be able to regulate how much you pay each month. The rate is usually fixed for between two and five years.

Discounted loans
This loan type offers you a reduction off the standard variable rate for a set period. If rates fall further, the rate that you pay will also go down. However, when rates rise, so will your mortgage payments.

A capped-rate loan
These set a limit on the rate you will pay. If rates rise, your payments will not go above that level. However, if rates fall below the cap so will your repayments.

Flexible mortgages
If you want to be able to overpay and underpay when you choose and without penalty, then this mortgage could be the right solution. These are ideal for people who have fluctuating incomes or who want to clear their mortgage early. An increasing number of fixed, capped and discounted deals have more flexible features as well.

When considering your remortgage options, always obtain professional advice for your own particular situation and read the key facts document thoroughly.
Avoid deals with extended redemption penalties and while these have been phased out in recent years, a number of lenders have reintroduced extended penalties to clamp down on so-called 'rate tarts' who move around frequently to get the best deal.

Some lenders offer dedicated remortgaging services with free legal work and valuations but others will charge for this service. The crucial point to remember is that the benefits of switching provider must outweigh any charges that you incur.