Remortgaging is taking out a new mortgage, usually transferring your current mortgage to a new lender. This can allow you to secure a better deal, which may not have been available when you initially took out your mortgage.
There are a few different plans for remortgaging as a first time buyer, and it’s not always an easy and straightforward process.
What does it mean to remortgage as a first time buyer?
Remortgaging as a first time buyer means finding a new mortgage deal, often with a new lender. This replaces your existing mortgage deal whilst you remain in the same property.
This might be done if your financial situation has changed, either for the better or for the worse, but should only be done after seeking expert advice from an expert financial advisor.
Why should you remortgage?
As a first time buyer, you should remortgage if your current mortgage deal is coming to an end, or if you can get a better deal than your current mortgage. You might also look to remortgage if you’re unhappy with your current service, or feel trapped in your current mortgage and want to move to a lender who offers better customer service or perks.
Finally, you should consider remortgaging also if the value of your property has increased, as you might be eligible for a lower loan-to-value ratio. To find this out, contact your lender.
When should you look to remortgage your first home?
In terms of when to remortgage, we would recommend that you start looking to remortgage your first home at least six months before the end of a fixed-rate mortgage deal. This allows enough time to find the right new deal without risking being shifted onto a high standard variable rate (SVR) with the same lender.
In essence, the best time to remortgage is when you’re sure it will improve your financial scenario. So ask yourself, would the costs of remortgaging right now outweigh the long term savings, and you can afford to pay those upfront costs?
How long does it take to remortgage?
From initial application to completion, you can expect remortgaging to take roughly 1-2 months. However, there are some factors that impact the time remortgaging takes:
- Application complexity
- Lender processing speed
- Speed gathering required documents
- Recent change in job or income
- Property valuation issues
- Market state
To speed up the process, you should ensure you have all relevant documents in advance, be prepared to answer common questions from the lender and speak to a professional mortgage advisor, like the team at Barlow Irvin.
What you need to prepare before you remortgage for the first time
There are a few things that are vital to prepare before you remortgage for the first time:
- Financial preparation – Check your credit score and assess your current finances to understand how much you can realistically pay each month.
- Necessary documents – Proof of income, bank statements, proof of address, ID, tax returns.
- Property valuation – A new lender needs to know the current value of your property so they can accurately estimate the loan-to-value ratio.
- Professional advice – Professional advice from a third party mortgage advisor is highly recommended if there is any part of the application which you’re unsure about.
Should you remortgage with the same lender or switch?
There are benefits to remortgaging with the same lender, but there are also benefits that come with switching lenders.
Staying with the same lender usually offers an easier admin process, as the lender probably already has most of your information, documents and knowledge of property. This should make the process much smoother and quicker. Additionally, staying with your current lender might help to avoid fees for ending your existing deal early, as a form of loyalty bonus.
On the other hand, switching lenders has higher potential for better mortgage rates, which could outweigh upfront costs. You might also be entitled to borrow more money if you need to.
Ultimately, making the decision between staying with the same lender or switching should involve comparing your available options and, ideally, speaking with professional mortgage advisors to help you through the process.
Remortgaging with the same lender: How it works
Usually referred to as ‘product transfer’ or ‘product switch,’ remortgaging with the same lender is usually a quicker and more efficient process than doing so with a new lender.
To do so, it’s as simple as checking your current deal, and comparing it with available options. Often, you won’t even need a valuation because your lender can make a valuation based on existing information.
Speak with your lender directly to initiate a product transfer.
Remortgaging with a new lender: How it works
To remortgage with a new lender, you need to gather all relevant information and documents, such as proof of identity, proof of income, tax returns, and more. You’ll typically have to undergo a property valuation, a full application and a legal process to transfer paperwork.
We’d recommend speaking to a mortgage advisor to help you assess all options with new lenders, compared to your current offer. This way, you can be sure that you find the best possible option financially.
Remortgaging costs to consider
There are a number of costs associated with remortgaging:
- Early repayment charge
- Deeds release fee
- Arrangement fee/booking fee
- Mortgage advisor/broker fee
- Admin charges
- Missed payment charges (is applicable)
Whilst mortgaging can have a number of financial benefits, you need to be aware of the upfront costs, and determine whether or not this is feasible/worth the long term gain.
What to do if you’re struggling to remortgage
If you’re struggling to remortgage, you should first try to work out exactly why this is. Is it because of issues with credit? Has your income dropped? Have you failed to build up enough equity? There are a number of reasons for which you might be struggling to remortgage.
Next, you should speak to a mortgage advisor to assess your options. As experts in first time remortgaging, you can help you assess your options and decide on the best course of action for you financially.
Get in touch to find out more.