Sep 17, 2008
A Few Remortgaging Tips
by Bi3ard
Remortgaging can be a very effective by means of saving lots of money to you, but you must be aware of its possible downsides as well.
In order to ensure efficiency of remortgaging, it's absolutely essential that you first fully evaluate any potential savings you'll enjoy against all costs associated with the deal.
This article provides few things that you should keep in mind as you're considering your remortgaging options:
Tip 1
Most lenders will offer a wide variety of remortgage products, such as discounts, fixed or capped rates, cash-backs or flexible deals. If there's anything that you don't understand, don’t hesitate to ask a lender. Lender or advisor should explain the pros and cons of each deal that interests you. Remember, there are no silly or stupid questions when your hard-earned money is at a stake.
Tip 2
While it's often not wise to remortgage directly to a new lender's standard variable rate, kepp in mind that if you're initially getting a discount, fixed or capped rate, it's likely that you'll have to pay their SVR when the mortgage deal runs out. So, the task for you might be to compare a lender's current rate with the one charged by other lenders. That may give you a clue how competitive the new lender truly is.
Tip 3
Keep in mind that many mortgage lenders apply early redemption charges (ERC) to certain deals. Redemption charges are penalty fees charged by lenders to encourage you against remortgaging and also to boost their profits in case you do. You could be charged an ERC if you pay off your existing loan or remortgage with a new lender within a specified period of time. So, before you agree to remortgage, check if ERCs applies in both your existing and proposed new deals and if so, check the amounts of ERC.
Tip 4
Always compare arrangement fees. Many lenders are so keen to attract your business so they've developed special remortgage deals that charge no fees. This means that you might not have to pay for the valuation or even the legal fees for your remortgage. But still be careful and remember to evaluate the entire mortgage deal.
Tip 5
If you're suffering from the effects of bad credit, don’t worry, you can certainly still find a lender to work with. Remortgaging may offer you two major benefits in this case:
lower monthly payments
the opportunity to consolidate your debts into one lower-interest loan
A bad credit remortgage can also help you to improve your credit rating by clearing your other debts and making timely payments on your new loan. However, keep in mind that although the interest rate of your remortgage deal may be lower, your total interest payments will be greater due to the longer length of the new loan.
Tip 6
Remember that you are free to remortgage as many times and as often as you like. Just be aware that each time you do a remortgage, you could be charged ERCs as well as arrangement fees. Remember that you should evaluate your mortgage at least every year or two to determine if remortgaging will really help you in saving your money.
If it will, still be wise and careful.
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