When Can I Remortgage? Should I Remortgage?

Table of Content

• How much can you borrow when remortgaging?
• When is the best time to remortgage?
• Final thoughts: how often should you remortgage?
• Can I remortgage to capital raise for home improvements or personal use, i.e., to buy another property?
• Should I remortgage to release equity?
• Are there any benefits to remortgaging early?

If you use a mortgage adviser to arrange your deal, there may also be broker fees. We explain fees in more details in our article “How much are the fees when buying a house“. However, with the Bank of England base rate currently at just 0.1%, mortgage deals are cheaper than ever, making it a great time to remortgage and save money, if your current deal is ending. Speak with us to see if your lender can provide you with a cost-saving retention product.

Lenders want to know that not only are you able to make the repayments now but also in the future should interest rates rise. The remortgaging process can take between a few weeks and a couple of months after you apply, but it all depends on your circumstances and how complicated your application is. Check your credit score before you apply because a good credit history shows that you have a history of responsible borrowing, meaning you are more likely to get the money you ask for.

How much can you borrow when remortgaging?

If you want to remortgage before the term on your current mortgage has expired, you will often be charged an early repayment fee or exit fee. This will vary depending on your lender, so make sure you are aware of any exit fees before switching. This is a variable rate mortgage with a cap in place to limit how high the interest rates can go. These could be good for you if you want a variable rate that could go up or down, but don't want to be hit with dramatic price increases that could make your repayments unaffordable.

Often, lenders have what’s called a “seasoning” requirement — a period of time you need to wait before refinancing, generally at least six months. Most lenders seek borrowers with less than an 80 per cent loan to value ratio to remortgage. Thirdly, remortgage lenders will look closely at your credit score. To obtain an attractive remortgage loan, a good credit score is usually a given. A personal loan is generally faster as they are for lower amounts and are unsecured so there is no property to value.

When is the best time to remortgage?

Leadenhall Learning, Money to the Masses, Investor, Damien's Money MOT nor its content providers are responsible for any damages or losses arising from any use of this information. Always do your own research to ensure any products or services and right for your specific circumstances as our information focuses on rates not service. As with any remortgage, the interest rate payable will depend on your credit score and also how much equity you have in your home. You can also look to capital raise when you look forremortgage advice. It depends on why you want to remortgage early, some homeowners choose to release equity in their property for home improvements or to save money.

Let’s say you have a 30-year fixed mortgage for $240,000 with 5.71 percent interest. Your monthly mortgage payment is $1,394, excluding insurance and taxes. Aside from these timelines, when considering how often you can refinance a mortgage, you want to make sure doing so makes financial sense. If the new interest rate isn’t significantly better than what you have right now, you might not save much after factoring in the cost of the refinance. Our experts have been helping you master your money for over four decades.

Final thoughts: how often should you remortgage?

The best time to remortgage depends on your circumstances, but the most common time to remortgage is when you come to the end of a deal. Typically, once a mortgage deal ends, it will move to a standard variable rate , which is set by the lender and is typically much higher than the introductory rate. Rather than accepting this, you could arrange a remortgage before your current deal comes to an end so you are ready to move to a better rate straight away. It is worth weighing up the costs and benefits of getting a personal loan or remortgage. There is usually a choice of repaying a personal loan over 1, 2 or 5 years, whereas a mortgage is worked out over a longer period, often for up to 30 years or more.

Some lenders may reject your application if you’re nearing the end of your mortgage term and you don’t have much left to pay. From your point of view, you may not save much money by switching at this point. Especially if your current lender would apply early repayment charges for leaving before your deal ends. You must demonstrate to the lender that you can afford the repayments if you remortgage. Both aspects of your financial situation, past and current, will be taken into account by the lender.

It This depends on the deals offered by your current lender in comparison to other lenders. Your current lender may have a lower interest rate but may charge much higher arrangement fees to set the mortgage up therefore may be more expensive overall in comparison to another lender. Your lender would likely not need to run a credit check on you because they already have first-hand knowledge of your ability to repay loans (unless you’ve skipped payments in the past). Your current lender may not be able to offer you a new interest rate if you are currently in arrears on your mortgage.

An increased mortgage equals higher mortgage payments, impacting your monthly disposable income. The application process for a personal loan can also be faster. Much of it is done online so often decisions can be made online in minutes and you could receive the funds within a few days.

If you have a lot of debt, a mortgage might not be the best option for you. Remember that you can contact us at any time for a more detailed response to your specific situation. Be as sure as you can that you will stay in the house for several more years, experts say.

Our mortgage advisors may also assist you with staircasing, which is the process of purchasing an additional share of a joint ownership house. Many will limit you to 80% or 85% LTV if you are capital raising for certain reasons such as debt consolidation or home improvements. If you use a broker, they may charge you a fee , or they are paid a commission by your new lender or they charge you a fee and get paid commission by the mortgage lender. Other considerations would be taken into account, such as your loan-to-value ratio and the current value of your home. The LTV ratio is a percentage representation of the difference between the amount you want to borrow and the value of your house.

The only issue you might face is if your home is in a block of apartments and the lease is closer to expiring. Lenders usually don’t lend on properties with a short lease, so it’s worth checking how long is left on the lease hold before you apply for a remortgage. And you could end up with a remortgage at a much faster rate than if you used a traditional lender.

Remortgaging allows you to switch to a new mortgage deal without moving home. Your property may be repossessed if you do not keep up repayments on your mortgage. Since the bank rate can be volatile, remortgaging to a new fixed-rate or reduced offer can provide some protection.

Make a note of when your current deal comes to an end and think about remortgaging several months ahead of this date. Many remortgage offers are valid for between three and six months from the date they are issued. Mortgage offers are usually valid for three to six months, so you could start the remortgage process several months before your current deal ends. If your current mortgage deal is coming to an end, the chances are you will be moved onto your mortgage lender’s expensive SVR. But that could well change when their fix comes to an end – at which point, they should look to remortgage to avoid being rolled onto a costly average standard variable rate.

Potentially roll credit card, car loan, and student loans into one monthly payment using a cash-out refinance option. If your financial situation has changed where you can no longer afford your monthly payment, refinancing could be an option to keep you in your home and avoid foreclosure. Technically speaking, there’s no limit to the amount of times you can refinance your mortgage. However, experts say you have to look beyond the interest rate to decide whether refinancing makes financial sense for you. If you have enough equity in your home, a refinance can provide the opportunity to remove private mortgage insurance . With the cost of PMI amounting to between $30 to $70 per month for every $100,000 borrowed, removing this expense can present significant savings.