A simple question to some but not all, what is a remortgage? In my 8 soon to be 9 years as a mortgage broker I have come across dozens of clients who weren’t 100% sure what it meant to “Remortgage”. Many believe that if you remortgage you are asking for extra money, some didn’t think it was possible to remortgage as they believed they had to stay with their current lender until the debt was repaid and a few had never heard of a remortgage.
If you find yourself in the any of those camps don’t worry below is a Leyman’s term explanation for you.
In most cases when you sign up for a mortgage you will receive a rate for a specific period (whether that is fixed or variable) which you are tied to. Meaning, if you were to leave in this period you would be charged an Early Repayment Charge. When this initial benefit period finishes you are free to leave the mortgage as long as you can find another mortgage to take its place….. or you’ve won the lottery and plan to pay off your mortgage. There could be a small mortgage exit fee of up to a couple hundred pounds for the administration involved closing your mortgage charged by your existing provider.
The chances are your mortgage adviser has found you a new lender who is offering you a good deal if you swap your mortgage to them. Sometimes they may advise you to stay with your current lender as they are offering an equally attractive deal or your circumstance dictate staying with your current provider is the best option (this is known as product transfer or product switch rather than a remortgage).
Be sure to review your mortgage well in advance of your rate ending, more often than not the rate you would move onto is considerably more expensive than your initial rate and is to be avoided at all costs. This is generally known as a standard variable rate.
For an no obligation review get in touch today.”