Remortgaging is when you get a brand-new mortgage deal on your current home. There are various reasons why people decide to remortgage their home, but one of the main reasons is to get a lower interest rate.
Due to the coronavirus pandemic, mortgage interest rates are at an all-time low, making the competition between lenders fiercer than ever. Some lenders have even dropped their rates to as low as 0.94%.
Find out the benefits of remortgaging, and whether now would be a good time to do it.
What are the benefits of remortgaging
If your current mortgage deal is about to end or your property has significantly gone up in value, you should look into remortgaging. When a mortgage deal ends, you’ll automatically be moved from your usual rate to your lender's standard variable rate, which usually ends up being more costly.
The reason most people decide to remortgage their property is so they can save money on their mortgage repayments. Another reason people decide to remortgage is so they can borrow a large sum of money without having to get a separate loan. This money is often used for large purchases, home improvements or as a way to consolidate debts.
Things to consider before remortgaging
There are certain things you should consider before remortgaging, such as:
- When your current mortgage deal is due to end
- Whether there are any exit fees or early repayment charges
- How much your property is currently worth (you can usually gauge this by checking how much properties in your area have recently sold for)
- Whether you’re eligible for a better deal than you’re currently getting – be sure to research all lenders on the market (to help with this you can speak to a mortgage broker or compare deals using a price comparison website).
Why is now a good time to remortgage?
For those who have large deposits or a large amount of equity in their current home, now might be the best time to remortgage as interest rates are at an all-time low.
According to Money Saving Expert, Platform are offering fixed rate mortgages at only 0.99% over 2 years. The Times Money Mentor has also reported that HSBC is offering 0.99% for people who have 40% deposit or equity. Other lenders offering low rates include:
- Cumberland Building Society (0.98%)
- Nationwide (0.99%)
- TSB (0.99%)
- Santander (0.99%)
One thing to note is that most of these deals are only available to those who have a minimum of 40% deposit or 40% equity. The arrangement fees are also fairly expensive ranging anywhere from £999 to £1999.
Ways to improve your credit score
To give yourself the best chance at being accepted for a mortgage deal you should make sure your finances are in order and your credit score is the best it can be. Here are some ways you can improve your credit score:
- Check your credit report regularly to make sure all of the information is up to date and correct.
- Pay your debt off before applying for any new credit – or lower your existing debt as much as you can
- Make all of your repayments on time to avoid late or missed payment charges – and a potential negative mark on your report
Read our step-by-step remortgaging guide to find out about the whole process.
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