Six steps to a quick and cheap remortgage*

Many people still find the prospect of remortgaging a daunting and complicated process. They shouldn’t because it isn’t. You can get tied up in knots with some of the mortgaging  jargon: fixed rates, discounted variable rates, capped rates, trackers, early repayment charges, APRs and so on. Even if you manage to get past that smokescreen, you still have thousands of potential remortgage offers to choose from. So the question many of our clients have is:  where on earth do we start from?

Step one: The starting point

The key is to start with the fundamentals and to ask yourself a series of simple questions. How much is your existing mortgage costing you every month? Leave to one side the interest rate for a moment. How much of your hard-earned cash is actually being taken by your mortgage lender to turn the bricks and mortar you live in, into your property, rather than theirs?

Once you have a clear idea of how much you are already paying, you need to know whether it is likely to change in the future.  This means asking yourself some additional questions, such as, are you, for example, already on a fixed rate mortgage that will change in X number of months/years and so on. So, this is your first step to remortgaging: know where you start from, what your existing mortgage costs are and what they may change to. You need this information, otherwise how are you going to filter out all those confusing mortgage offers in order to find the one that best suits your needs?

Step two: Ask your existing lender

Jim Nicholson notes that, “the mortgage market is crowded and highly competitive and can often be confusing for many. But because the lenders are in such fierce competition offering headline-grabbing loan rates, many of them now are now charging eye-watering fees. So, in the first instance, ask the question of your existing mortgage lender, can they offer you a better deal? Again, don’t become fixated on a headline interest rate number. What you want to know is how much the mortgage is going to cost you each month.

Will you make a worthwhile saving? How long will this saving be for? How much will the mortgage cost once the special deal rate comes to an end? Start with your existing lender as this can save you money in two ways, the only charge you’ll face from them (assuming you are not extending your mortgage at the same time) is a mortgage switching fee, likely to be anything between £100 to £599.

Step two can be a quick and cheap remortgage – what can your existing lender do for you? Don’t forget to budget for the mortgage switching fee against your potential savings.

Step three: Shop around

If you aren’t happy with the deals on offer from your existing mortgage lender then you might want to look  elsewhere, at this point it is worthwhile contacting PFM who do remortgaging work on a daily basis for clients, ensuring they are up to speed with the latest and best mortgage rates. This can be quite complicated and time consuming – although you can start straight away by using the plethora of mortgage comparison tools that are widely available on-line.

Step three to a remortgage therefore is to shop around online, however, don’t forget to seek professional advice . Searching on-line can be fast, simple and it doesn’t cost you anything and you don’t have to commit to anything.

Step four: Clarify the costs

If you decide you’re going to get a mortgage from a new lender, you’ll need to know some more basic information before you can be sure you’ll be making a decent saving by moving your mortgage. How much will your existing lender charge you as an exit penalty? How much will your new mortgage cost – is there a reservation fee? What about an administration fee? You may be amongst the majority of people that think that  mortgage lenders make their money out of the interest they charge. Apparently not so or not just so: some of the most eye-catching low headline interest rate deals on offer come with upwards of £700-900 in fees attached. These costs can make your new deal much less attractive than it looks at first.

Step four to a quick and cheap remortgage – make sure you understand the costs involved with the mortgage offer you want to consider. Don’t forget if you’re going to approach a new lender, you’ll also be required to pay for a new valuation and there’ll be more legal fees as well.

Step five: Added extras

Watch out for those valuable added extras. They are more likely to be valuable to the lender and not to you. Are you going to be obliged, for example, to purchase buildings insurance tied to the mortgage? Some lenders offer a so called low rate as long as you buy their insurance, which can be over-priced and ends up paying for part of your so-called special deal.

However, sometimes what’s on offer really is worth having. Your new mortgage may come with refunds – refunds of valuation fees and legal fees or free legal work thrown in. It’s worth looking for deals like these – you could save yourself several hundred pounds.

Step five to a quick and cheap remortgage – look for a mortgage offer that really does have value-for-money extras such as refunded fees and free legal work. That may be worth up to £600-700 to you!

Step six: Do it today

Just remember whose money this is that we’ve been discussing. Not the bank’s, not the building society’s. But yours – wouldn’t you rather keep more of it for yourself than hand it over to them?

Step six to a quick and cheap remortgage – realise that you are the beneficiary of this research!  Don’t delay – review your remortgage options and contact PFM today!

* Your home may be repossessed if you do not keep up repayments on your mortgage