When your current mortgage deal comes to an end what are your best options?
There are many different reasons why people choose to switch mortgages, from debt consolidation, finding better interest rates, increasing or decreasing the loan and/or changing the mortgage term, to name but a few.
Although there are a lot of similarities between a mortgage product transfer and remortgaging, there are important differences between the two to consider before deciding which option is best for you.
What is a mortgage product transfer?
With a mortgage product transfer you can simply change your current mortgage product to a new one with the same lender. If you are keeping the same term and the same balance most lenders will switch you to a new mortgage within their product range with a limited level of underwriting, providing you are not in arrears.
The main benefit of a product transfer is that it will be faster to arrange than a full re-mortgage. This is because the property will not need to be revalued, legal fees can be avoided, and credit searches are unlikely to apply as you are retaining your original lender and simply moving to a different mortgage product.
However, if you wish to borrow additional funds, your lender will need to ensure this is affordable for you. They will need to take into consideration several eligibility factors, including but not limited to, your employment status, income and expenditure, your age and the amount of equity you have in your home.
What is a remortgage?
Remortgaging means paying off your existing mortgage by taking out a new one with a different lender. Like mortgage product transfers, you can do this to replace your current mortgage with the ability to borrow the same amount as your existing mortgage or borrow an additional amount, which may be useful if you are looking to improve or extend your home.
The main benefit of remortgaging is not being limited to your existing lender’s mortgage products, which could result in you finding lower interest rates, particularly if your home’s value has improved. Or perhaps a more flexible mortgage allowing for overpayments or the facility to borrow more money, if required. You could also use the opportunity to extend or reduce the term of your loan or the repayment type of your loan
However, remortgaging to a new lender will result in the new mortgage being fully underwritten. The lender will have to be satisfied that the mortgage loan over the specified term is affordable and credit searches will have to be carried out. A fully qualified mortgage adviser should be able to give you a very good idea if your application will be successful before applying.
Which is right for me?
Although there are a lot of similarities between a mortgage product transfer and remortgaging, there are very important differences between the two to consider.
Remortgaging may come with a lot of the fees that a standard new mortgage comes with (property valuation, solicitor fees, conveyancer fees etc.). These additional costs may not suit you or put you in a financially better position, so advice is key before a decision is made.
If you, your family or your friends are considering a change of mortgage, and you are not sure which option is right for you, then our mortgage adviser, Paul will be happy to advise you on the best solution based upon your specific circumstances.
YOUR MORTGAGE WILL BE SECURED ON YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
To find out more or to discuss your situation, please call us on 01732 746188 – we look forward to hearing from you.