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   1. Calculator
   2. Remortgage
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Remortgage Revolution

Did you know that if you remortage you could save yourself a bundle in the long run?

You sound like an advert.

Listen pal, I'm just telling you the truth.

You can't handle the truth.

We're not here to reminisce over old war movies you know. What I'm trying to say is you can pay off your existing mortgage by taking out a replacement with a new lender with a better deal.

A bit like trading your old car in for a faster one?

Sort of.

Or getting a new girlfriend, with bigger t…

Towels? I suppose so (as long as you're going for someone that's more attractive, intelligent, and has a better personality). And that they're 100% Egyptian cotton.

SO IS 'GETTING A NEW MORTGAGE' OTHERWISE KNOWN AS A REMORTGAGE?

You're getting good at this. To remortgage means replacing an existing loan with a new one from a different lender - although it is not uncommon to hear people say they have remortgaged when they have simply taken a new deal from their existing lender.

And why would I want one of these?

Whether you need the extra cash to buy a second house, to buy a speedboat, or a Russian bride, a remortgage is often a good option as it cuts out the need for a new valuation and searches. And as a result, it reduces the cost of getting a new mortgage.

Well, they do say a change is as good as a rest.

Do they? Who are 'they' anyway? It doesn't matter, they are right - it's certainly the case for some borrowers, who will find switching to a new mortgage deal can knock thousands of pounds in interest payments over the life of their loan.

'They' are right then.

Indeed, but you need to weigh up whether the likely savings on your monthly payments compensate for the costs of a remortgage. For anyone who currently pays a lender's standard variable rate (SVR)…

YAWN!

Hang on a minute I haven't finished! For anyone paying an SVR, a remortgage could be a way to save hundreds of pounds a year.

Now you're talking sonny! Tell me more, but in English this time.

It's quite simple you know - one of the main reasons for remortgaging is to reduce the cost of your mortgage. If this is your motivation you should look at the rate you currently pay and then see if there are any better rates on the market. Lenders often bring out attractive new deals for new borrowers but leave existing borrowers paying higher interest rates. Another reason is to have a more flexible mortgage that, for example, lets you overpay or miss some payments.

I shouldn't dive in like the proverbial beaver, should I?

Well, as a potential remortgagee, you need to establish whether you actually have anything to gain by moving your mortgage.

But what if I hit the jackpot and find a better rate?

If there is a better deal, ask your lender if they can offer you anything similar. They should be willing to move you on to a lower rate, unless your current mortgage is subject to early redemption charges.

Early what?

Early redemption charges are levied if you repay your loan in a certain period. They are often found on deals with a special offer rate upfront - for example a fixed or discounted rate - and are designed to help the lender recoup the costs of setting up the deal.

Sounds to me like they're being greedier than a kleptomaniac octopus at the Sunday morning car boot sale.

You're not wrong! Usually, the charge is a percentage of the loan you are repaying, or a number of months' interest. Most charges are payable only during the special offer period, but in some cases they are levied beyond that - these are called overhanging redemption charges.

This all sounds a bit too complicated to me.

It's not that bad actually. In most cases, arranging a remortgage will be fairly straightforward and will take much the same form as arranging your first home loan.

Oh yeah, like that was easy.

Okay, okay - but if it saves you money, it's worth it.

Yes, but I could save money by not getting my loved one a birthday present this year.

You could, but you'd soon be single, and then you'd have to spend money finding someone new.

Fair point. What will I need to do then?

What, about your loved one? Dump them, save some money!

VERY FUNNY.

Seriously though, your new lender will ask for paperwork to support your application, including proof of your income and your outgoings. They will carry out a valuation - although on a remortgage the surveyor may just literally drive past the property and check the roof hasn't fallen off - and ask for information about your home. Some will want you to instruct - and pay for - a local authority search; others will accept title insurance - a policy covering them against anything that would have been uncovered in the search. Your solicitor will organise the searches, and handle the switch over from your current lender to your new one.

Jeez, it's not like buying a bag of chips is it…

It's not all plain sailing, that's for sure. There are disadvantages of going for a remortgage. For starters, if you have a mortgage, which ties you in for a particular time you may have to pay an early repayment charge when you pay off the old mortgage. But you can avoid this if you wait until the end of the period during which these rates are payable.

Sounds straightforward enough.

Also factor in that you may have to pay valuation and solicitor's fees to get the new loan - though sometimes the new lender will pay these for you. And bear in mind that the lower interest rate on the new mortgage may only be for a limited period. It could end up being as expensive as a trip to Harrods with Andy from Little Britain ("I want that one")…

"Yeah I know". Heh heh. How much then?

It's not that bad… The total legal costs should be much lower than when you bought the property, as there are no contracts to prepare and there is no stamp duty to pay. However, you should still budget to spend £300-£500, unless your new deal comes with free legals.

'Free legals' - got it. Is there a good time to start looking?

It shouldn't take long to replace your current deal with a remortgage, but if you're coming to the end of a fixed-rate or discount period you, can start shopping around some months in advance.

Most mortgage offers last for around three months, and if you plan ahead you can have a new deal sorted out to start the day the special-offer rate ends. This means you can hop from one fixed rate to another and avoid paying over the odds for your loan.

Good thinking batman.

Thank you my little admirer of nocturnal flying mammals.

I BETTER START LOOKING THEN..

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 I find the great thing in this world is not so much where we stand, as in what direction we are moving - we must sail sometimes with the wind and sometimes against it - but we must sail, and not drift, nor lie at anchor. 

Anon