The events of 2008 have made the mortgage market a scarier, more uncertain place for many British homeowners.
The good news is that some of that is unnecessary - the bad news seems to be that no one wants to show you how to make things easier for yourself. In this article I’m going to set out the basic steps you should follow if you need to remortgage in the near future or would like to calculate the possible savings from remortgaging your home.
I’ll be honest - I am making some assumptions about your financial status:
You have a stable, provable income - ideally employed
You have at least 15% - 20% equity in your home
You have a good credit rating
If this sounds harsh, I’m sorry. The reality is that for people who don’t meet these conditions, finding a competitive mortgage deal isn’t so easy anymore. Having said that, if you are in this position, I would still follow the steps below to see what you can find.
1. Charity Begins at Home
The best place to start looking for a competitive remortgaging quote is with your current lender. Although their published deals may not light your fire, lenders often reserve some quite favourable deals for existing customers.
The reasons for this are simple - existing customers (hopefully) have a good payment record and keeping them happy with a good deal costs much less than having to find a new customer to replace a departing remortgagee.
2. Start Early, Research Widely & Remember You Can Reserve
You might get a good deal from your existing lender - but you’d be mad not to take a look at other lender’s offerings, too - always remembering to calculate all remortgaging costs and fees.
The key thing here is to start the remortgaging process early - as much as six months before your current deal runs out. You may be worried about having to pay early redemption fees if you find a deal quickly - but don’t be.
Most mortgage lenders allow you to reserve a mortgage deal - typically for three or even six months. This means that you can, with a little luck and planning, arrange for your new deal to take over seamlessly when your existing deal ends.
The big advantage of this, of course, is that you can avoid having to pay your existing lender’s standard variable rate of interest. This is usually much higher than their fixed or tracker rates.
3. Mortgage Broker or Direct?
Getting several remortgage quotes and comparing them has always been a good idea and today it is more important than ever.
Mortgage brokers are ideal for this. Sourcing a quote from every lender on the high street will probably take weeks - and in any case, not all the best mortgage deals are available directly from lenders.
Mortgage brokers will be able to recommend what they believe is the best option for you - and they should be able to explain why. It’s also a good idea to get your broker to explain the different types of interest rates deals available, too, if you aren’t completely sure you understand them.
Don’t be afraid to try a couple of brokers - they may well come up with different recommendations. By doing this and getting a quote from your existing lender, you should be well on course to finding the best remortgage deal for you.
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