If you currently have a property under the terms of a mortgage, it can be tempting to look into refinancing your mortgage in the pursuit of favourable terms.
However, before you decide to make any borrowing commitments, it is important to take advantage of all the remortgage advice you have access to and do as much research as you can, from the plans and options available to the current Bank of England rate to ensure you get the best deal.
Remortgaging is when you pay off one mortgage with another, typically under better terms that can reduce your monthly payments.
Here are some top tips when deciding on a remortgage plan:
Check Your Credit Rating
Your credit rating is the way most mortgage providers will determine if you are a suitable candidate, as it highlights how likely you are to pay off debts.
The way to boost your credit score if you have had issues before or do not have any debt is to prove you are capable of paying recurring payments and debts.
Check your credit score, look into what factors have affected it and you will be more aware of what remortgage options are available to you.
Whilst your current provider is likely to give you remortgaging options, you can also go to another building society or bank to find another option, or use a broker to find the best deal you can.
Be prepared to take some time to find the best choice, and do not commit unless you feel you have the best deal possible, as it could be costly to change course.
Do Not Commit Too Early
Multiple loan or mortgage applications can have a negative effect on your credit score, so do not fill in an application without being fully ready to commit.
Look for lenders that offer an Agreement In Principle, which isn’t an actual application but gives you an idea if you are likely to be accepted if you did apply.
Check Your Fine Print
Check the terms of your current mortgage, as there may be unexpected expenses associated with getting a remortgage.
The most common example of this is early repayment charges which can be levied when you remortgage, but other charges are possible if you, for example, move to another lender.
Make sure you know that you would actually save money with your remortgage under these terms before you apply and seek professional advice on any contract you are set to sign.
Check Your Loan-To-Value And Try To Lower It
Your loan-to-value ratio or LTV is the size of your mortgage compared to the value of the property attached to it.
You can work it out by dividing the amount you owe by the current value of the home, multiplied by 100 to get the percentage.
The lower this figure is, the less risky the remortgage is and the better terms you can get a loan under.
This involves not only checking how much you have already paid on your mortgage but also checking how much your property is worth in case it has changed since you bought it.