Remortgaging? 5 things to consider

If you are currently thinking of remortgaging your property I have a list below of the top five things to consider first.

1. The value of your home:
House prices can vary from place to place so get an accurate valuation of your home. You can do this by looking up similar properties Zoopla or Rightmove and also inviting 2 or 3 estate agents round to value it. The more your property is worth, the lower your loan to value and the lower the interest you will pay.

2. Loyalty doesn’t pay:
Staying with your current mortgage provider, or looking to get a mortgage from your current account provider, will probably leave you paying more than you need to. An investigation by Money Mail found that six out of ten of the UK’s largest lenders charge their own customers higher rates than those switching from another lender. The difference in interest rate could add up to loyal old-timers paying £300 a year more than new customers. So, when it is time to remortgage, shop around and switch to a new lender to get the best possible rate.

3. Low rates vs high lender fees:
Many lenders will launch mortgage deals with very low rates to get themselves to the top of the best-buy tables, but they’ll protect themselves from losing money by including hefty fees. The effect of the fee will depend on how large your mortgage is. If you have a very large loan, it may be worth paying the bigger fee in order to get a lower interest rate.

4. Small savings add up:
If your lender has offered you a re-mortgage rate of 1.5 per cent, but the best buy rate is 1.2 per cent – is it worth the hassle of switching? Well, over two years, you would save yourself almost £700, even allowing for fees. A small difference in interest rates can mean big savings over the years. Over a 25-year mortgage, that kind of small difference can add up to thousands of pounds saved.

5. Seek independent advice:
Finding the best mortgage deal for your individual circumstances is difficult. Do you want a low interest rate or a low fee? Will a lender accept your application for that best-buy rate or are you better off applying for a different deal you are more likely to be accepted for? Given that your mortgage is likely to be the biggest financial commitment you ever make, it is one area where seeking out independent advice could reap you huge rewards. Consider using a mortgage broker to help you navigate the mortgage market and make sure you get the best possible deal for you. They typically cost around £200-£500 but are likely to save you a lot more than that over the life of your deal.

Elaine

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