Security is often a borrower’s primary concern when it comes to getting a mortgage. You would always want to ensure that you do not end up paying more than what is necessary. However, you lose a bit of this security when your mortgage’s fixed term ends.
During the fixed term, you are charged a definite interest on your mortgage. This gives you surety about the money you will be paying to settle your debt every month. Once this period ends, your mortgage interest rate becomes variable, making it difficult to find reassurance. You never know if you will pay more or less than your fixed-rate repayments.
Most mortgage borrowers do not wish to live with this insecurity and prefer remortgageing their properties. If you are nearing the end of your mortgage’s fixed term, it is better to get in touch with your local mortgage broker and find the right way to remortgage your property. Remortgaging allows you to end your current mortgage deal and switch to a new one. Here, you can enter a new fixed term and gain the lost security back.
However, remortgaging can get tricky if you are not well-informed and do not work with qualified professionals. Do not rush the process and be mindful about the steps you take. Should you go to a new mortgage lender? Is your current lender giving you a better deal? Can you remortgage with bad credit? Can you remortgage with reduce income?Find out answer for questions like these before making any major decisions.
Let us have a look at a few important steps you should take to prepare for remortgage at the end of your fixed term:
Assess your financial situation.
Remortgaging is not something you take a nosedive into. It is a calculated process that requires a thorough assessment of your finances. Has anything changed since you got your current mortgage deal? Take a closer look at your income, expenses, savings, and affordability to see if you are capable of remortgaging. If remortgaging will deteriorate your financial circumstances, it is better to wait it out.
Confirm when your fixed term ends
As trivial as this sounds, it is critical for a mortgage borrower to track their fixed term. Be sure of your fixed term’s end and mark your calendar. Do not start when the term is just about to end. It would help if you had some time to explore remortgage options and look for the right deals.
Ensure that you have finalised your decision about remortgaging a few months before your fixed term ends. This gives you a buffer and prevents you from lading into trouble induced by last-minute panic.
Analyse all your options
While remortgage is often the most feasible way to extend your fixed term, it may not always be the best alternative. Before remortgaging your property, have a detailed look into all options you have at your disposal. Can you afford to switch to a variable interest rate? Should you wait a little longer before remortgaging your property? Do you want to get a new fixed rate by changing your mortgage lender? Is selling your property a good idea? Explore every single option before solidifying your decision.
Even after finalising your decision to remortgage, there are multiple options you should assess. Look into the type of mortgage you want to switch to and see if you want to change your lender. All these decisions will impact your switch to a new mortgage deal.
Are the expenses too overwhelming?
Remortgaging comes with its own share of expenses. Many lenders charge 1% to 5% of the sum owed as the early repayment charge if you close your current mortgage too soon. Are you eligible for this charge? Ask your lender. While most mortgage lenders do not charge these fees after the end of the fixed term, it is better to be double sure about their criteria.
If you are switching to a new lender, you may be required to pay arrangement and solicitor fees to prepare a new deal. See if the lender charges valuation fees or shoulders responsibility for the same. Are you working with a fee-free mortgage broker? If not, you will be paying the brokerage as well. Make a list of all the expenses you will meet while remortgaging your property. Go ahead with the switch only if they do not overshadow the benefits, you are likely to receive.
Keep your documents ready
While the documentation for remortgaging is not as elaborate as getting your first mortgage, it is important to keep all relevant documents necessary while you prepare. If you are switching to a new mortgage lender, you will need more documents to convince them of your affordability.
Gather documents like credit reports, proof of income, bank statements, and more as per the concerned lender’s requirements. As you do so, analyse these documents to see where you stand and assess your financial situation. This will prepare you for the verdict you are likely to get from your lender regarding remortgageing your property.
Look at the bigger picture
Most mortgage borrowers’ remortgage with the purpose of becoming homeowners after settling their debts (preferably through fixed interest rates). Many borrowers remortgage with the purpose of boosting their savings, settling existing debts, renovating their houses, and more.
Before going ahead with the remortgaging process, make sure you have a well-defined purpose for the same. For this, you need to look at the bigger picture and be far-sighted. Working with a clear goal in mind will make things a lot easier for you.
Seek help from experts
While you prepare to remortgage your property at the end of your fixed term, take as much help from qualified professionals as possible. For example if you are looking to remortgage in slough then look for Mortgage Broker Slough. From your local mortgage broker to your financial advisor, reach out to every expert who can help you in your journey. This will keep you equipped with information, tips, and tricks needed to navigate the market in the best way possible.
Whatever your decision is, it is important to take remortgaging seriously when the interest rate is very high. Give it the importance you gave to your first mortgage, and you’ll find a way!