Remortgage Process - Cheap Mortgage Deals

The process of remortgaging requires as much thought as it did the first time you took out the loan. There are some immediate pointers to consider. Your re mortgage should be as flexible as your mortgage. To be truly flexible your mortgage should:

  • Charge interest on a daily basis
  • Allow the borrower to borrow back previous overpayments
  • Allow the borrower to take payment holidays to the value of previous overpayments
  • Allow overpayments with no restrictions
  • Not charge any early redemption penalties
  • Allow underpayments to the value of previous overpayments

During 2003 remortgaging made up 50% of all lending for the first time and since then it has gained momentum and proved to be one of the most popular way for borrowers to raise cash.

Many lenders were caught napping whilst their existing borrowers discovered that the mortgage market has exploded with new lenders and new products. Millions of homeowners where paying their lenders an often uncompetitive standard variable rate and switching to a new mortgage deal at a lower rate can save thousands in repayments each year.

Before embarking on a product change consider the following:

Are there any early redemption charges - if they are not too frightening it may still be worth switching your product in the long run. Look at the figures over the entire lifetime of the new loan.

  • The monthly repayment cost
  • Set up costs
  • Arrangement or application fees
  • Valuation fee
  • Legal fee
  • Early redemption charge on the new loan - will it be too prohibitive if you want to move your new mortgage in the future - how long will they apply for.
  • Cashback or any fees paid by new lender.
  • Will you lose any benefits - If you took out your current mortgage before October 1995, you would have qualified for more generous help with your mortgage payments from the state if you are unable to work.

For mortgages taken out prior to 2nd Oct 1995 the state income support to qualify starts after eight weeks of claiming and is worth 50% of the interest for the next 18 weeks and 100% after that date. With mortgages taken out after 2nd Oct 1995 there is no help with interest payments for the first nine months of the claim.

If your mortgage predates October 1995 you will risk losing the right to more generous state income support terms if you re mortgage for a larger loan from a new lender.