What is remortgaging?
Remortgaging is when you replace your current home loan with a new mortgage. You might decide to do this when the product of your existing mortgage comes to an end, usually because a new mortgage product can save you money through lower repayments.
Remortgaging is not the same as switching a product, which is when you remain with your present lender but choose a different mortgage product. In contrast, remortgaging is when you actually change your mortgage to another lender. However, before doing so, it might be a good idea to approach your current lender to see if they’re able to find you a better mortgage rate as this can save you the extra expense of fees and charges that normally comes with remortgaging.
You may believe you’re saving money with a lower interest rate but, in reality, you might be worse off if you haven’t taken into account the mortgage fees and other charges. It’s therefore essential to calculate all the costs so that you know which is the better deal.
Early repayment charge (ERC)
This is a penalty you incur if you repay your mortgage during a tie-in period, which tends to be the length of the initial deal, for instance, a fixed rate two year term. It can also happen if you overpay more than is allowed in the deal. It could prove costly as a typical early repayment charge comes from a percentage of your current mortgage balance.
Sometimes referred to as a ‘deed release fee’ or admin charge, this is a charge for releasing your property deeds to your solicitors.
Often the most expensive part of remortgaging, mortgage fees could be the deciding factor in your decision to change lender or not. They can range from an arrangement fee to a booking fee and product fees, and are paid to your new lender. In making your decision, you need to consider the possible fees carefully as they can make all the difference.
This is required by all lenders as they want to be sure the money they’re lending you will cover the cost of the property if, for whatever reason, you weren’t able to keep up your repayments. Ideally, when remortgaging, this fee is paid for by the mortgage lender. Indeed, it’s often included in many mortgage products.
This relates to the transfer of the legal ownership of the property from buyer to seller. Legal ownership can also be called the title. In all, the process can take up to three months, possibly even longer.
Check out all the costs that can occur with our fees and costs explained guide.
Types of mortgages available
Here at the West Brom, you’ll find a range of mortgages designed specifically to meet your financial circumstances including competitive fixed and discounted variable rate mortgages. We can also help you choose the one that feels best for you.
Fixed rate mortgages - If you want the peace of mind that comes from knowing what your mortgage repayments will be every month, then a fixed rate mortgage could be for you. This type of mortgage fixes your interest rate for an agreed period of time and means your rate won’t be affected by changes in the Bank of England Base Rate, whether it goes up or down.
Tracker mortgages - A tracker mortgage follows and tracks movements of another rate. This is usually the Bank of England Base Rate. As a result, you could benefit from cheaper payments when the Bank Base Rate is low; but you’ll also need to budget for higher mortgage payments should the Bank Base Rate go up.
Variable rate mortgages - There are several types of variable rate mortgages such as standard variable and discount. Like tracker mortgages they don’t protect you from future rate increases but they could allow you to benefit from cheaper payments when interest rates are low. Standard variable rates are usually set by individual lenders so they might change without the Bank of England Base Rate moving. This includes the West Brom but, if we do change our Standard Variable Rate (SVR), we’ll make sure we tell you by writing to you with plenty of notice to let you know if your mortgage payments will be going up or down.
From time to time, the West Brom may withdraw certain types of mortgages or change its range of available mortgages.
Changing your mortgage
If you’re looking to product switch or remortgage there are usually two options:
- Reduce mortgage term – You may be able to find a deal that gives you the same monthly payments but this option enables you to reduce the overall mortgage term. The great thing is that you’re paying off your mortgage in less time, leaving you with more money for the things you might want to do in life, especially if you’re nearing or enjoying retirement.
- Pay less each month – Instead of reducing your term, you may want to opt to reduce your monthly outgoings. As your mortgage term is going to be less anyway, you should be able to get a better Loan to Value (LTV) mortgage. Again, this usually reduces the amount you pay as the relevant percentage tends to be lower, so providing that little bit extra for the likes of a holiday, for instance.
Application process to remortgage your home
Ready to Remortgage?
To ensure the remortgaging process runs smoothly, you’ll need essential information and documents when getting in touch with us. It probably also helps to have a good idea of your current financial details such as the term left on the mortgage, monthly repayments and that kind of thing. The main items required are:
- Your last three years’ address history, with no gaps
- Details of income. For example a recent payslip and P60
- Your last month's bank statement
- Full details of any loan or credit cards you have
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE