Remortgage tips
February 13, 2009 by admin
Filed under Remortgage Advice
When the Bank of England’s base rate is falling, many homeowners with fixed-rate mortgages may be tempted to remortgage and switch over to a tracker mortgage with a lower interest rate.
If you’re one of them, it’s vital you do the maths, think ahead - and remember why you chose a fixed-rate mortgage in the first place. That’s not to say you should definitely stick with your fixed rate, but you certainly should think it through carefully.
Do the maths
How much would it cost you to remortgage? If your current contract mentions an ‘Early Repayment Charge‘ (ERC), that means you’ll have to pay your mortgage lender a certain amount if you exit your mortgage deal before a pre-defined time. And be aware that the tracker mortgage you’re looking at could well come with an arrangement fee. Depending on the size of these two figures, you could actually end up paying more than you’d save if you did remortgage.
Think ahead
What do you think lies ahead for the economy? Interest rates might be dropping now, but no-one anyone knows where they’ll be in a year. If they suddenly shot ‘through the roof’, the consequences for people with tracker mortgages could be severe - but people with fixed-rate mortgages would see no change at all to their monthly payments.
Of course, many people with tracker mortgages may be planning to keep a close eye on the base rate and switch to a fixed-rate mortgage as soon as it starts to rise, but is this really a safe strategy? If the base rate (and therefore the cost of their tracker mortgage) jumps several points overnight, they may well find that the interest charged on all new fixed-rate deals jumps just as much - and just as suddenly! In other words, the only fixed-rate deals available could be a lot more expensive than the one they’re on right now.
Remember why…
So remember why you chose a fixed-rate mortgage to begin with. Whatever happens to the economy, a fixed rate means your monthly mortgage payments won’t change.
After all, the base rate can only sink to zero - but there is (in theory, at least) no upper limit at all. Seeing your monthly mortgage payments drop by, say, £200, might be enjoyable, but what would happen to your budget if they suddenly rose by £200?
If you’re not certain you could afford that, then maybe you should stick with your fixed-rate mortgage. You won’t get to celebrate when the base rate goes down, but you won’t need to worry about it going up either - and when the economy’s going through an unpredictable period, isn’t it good to have a bit of stability in your finances?
Are you thinking of Getting A Remortgage? Click here now to visit www.ThinkMoney.com
Getting a remortgage
January 28, 2009 by admin
Filed under Remortgage Articles
If you are thinking of getting a remortgage click here
Getting a remortgage is one of the biggest financial decisions you will have to make. As with a new mortgage, it’s a big financial commitment - but when it comes to remortgaging, it’s possible to save yourself a lot of money each month compared with your existing mortgage agreement.
Why do people remortgage?
End of existing mortgage deal
Most mortgage deals offer special terms that usually last a few years before reverting to the lenders standard variable rate, and once those terms are up, it’s time to remortgage.
You can either remortgage with your existing lender, or with a new lender. The most important thing for you will probably be finding the mortgage deal with the lowest interest rate in order to keep your monthly payments as low as possible.
Debt consolidation remortgage
If you are in debt, you can also use a remortgage to help repay those debts. A debt consolidation remortgage involves withdrawing some of the equity in your home (e.g. any deposit, payments you have made and any increase in your home’s market value) and using it to pay off your debts. You will then repay the borrowed amount on top of your regular mortgage payments.
Tips for getting a remortgage
If you are looking for a remortgage, it’s sensible to take a few simple steps to improve your chances of getting the best deal.
1. Check your credit history
Your credit history is a record of all your credit activity over the past few years. When you apply for credit (including a remortgage), the lender will assess your credit history, based on their own lending criteria, to decide whether or not they can lend you the money.
However, mistakes can sometimes occur - and it’s important to ensure that your credit history is up to date and free of errors in order to give the best account of your credit activity.
All the major credit reference agencies (Equifax, Experian and CallCredit) offer online credit check facilities. If you find any errors on your credit file, all you need to do is call the creditors concerned and ask to have the entry corrected.
2. Take your time
It’s important to give yourself adequate time when looking for a remortgage. Don’t leave it until the last few weeks. Two or three months should be enough to get a reasonable idea of the range of mortgage deals on offer, and where to find them.
Some lenders will allow you to ‘reserve’ your mortgage deal a few weeks in advance - so you shouldn’t have to worry about the best deals being taken off the market shortly before you start your new terms.
3. Get professional mortgage advice
It’s possible to search for a remortgage on your own, but a lot of people prefer to get help from a professional mortgage adviser. Speaking to a mortgage adviser about finding a remortgage can greatly reduce the time and effort involved in finding the best remortgage deals.
A mortgage adviser will be happy to give you free, impartial advice on your remortgage, and may be able to help you find the best deal for your circumstances.
If you are thinking of getting a remortgage click here
Tips to Finding the Right Remortgage for your Home
January 2, 2009 by admin
Filed under Mortgage Articles, Remortgage Articles
Generally the reason people go into a remortgage situation is to save money. When you secure a new mortgage, you can often do so with a smaller interest rate than you will have on your existing mortgage. Overall this will reduce your monthly payments. For the long term, getting a lower interest rate may also decrease the total amount you repay over the term of your loan.
Getting the best remortgage deal may not always be the easiest thing to do, particularly with the number of vendors that are fighting for your business. It will take a significant amount of time and research to find the best remortgage deal for your home. However, if you take the time and conduct your research properly, the final result will be worth your efforts.
When you are looking for a remortgage, you should be on the lookout for factors like lower interest rates, better repayment terms, and an overall lower monthly payment. Examining each of these criteria carefully and applying them to your remortgage will ensure that you are paying less money for the long term and this will essentially ensure you have received the best deal possible.
Interest rates are going to be the key criteria in determining whether you get the best remortgage deal. The more equity you have in your home, the more likely you are to get a better rate. Keep this in mind when you are remortgage shopping. Repayment terms are another huge factor in determining your remortgage needs. When you borrow a lower amount than your original mortgage, your repayment terms should enable you to have lower payments and also reduce the amount of time it takes to repay the remortgage. These can be determined by comparing rates from various lenders and they will be different depending on the deal and the company that you choose.
Make sure that you look for and evaluate many financiers both online and in your local area until you are satisfied with a lender that is right for you. This will give you a greater chance at securing the best remortgage loan and ultimately, saving the most money at the end of the day.
Remortgaging in a credit crunch
November 7, 2008 by admin
Filed under Mortgage Advice, Mortgage Articles, Remortgage Advice
In the midst of the credit crunch, remortgaging can be a stressful experience for homeowners. The best interest rates are often only available if you are willing to pay a mortgage arrangement fee - and those on variable-rate mortgages can soon find their mortgage payments getting more expensive than they may have expected.
Lenders are being careful with their lending these days, but they are still being competitive. With that in mind, it makes sense to look around and ensure you are getting the very best deal on your remortgage.
Plan ahead
It’s essential you don’t leave your remortgage too late - any less than a month’s planning could leave you pressed for time. Ideally you should leave at least 2-3 months to go over your options, which gives you enough time to look at what’s available without rushing.
Find out all the costs involved
As with a new mortgage, there are many costs associated with remortgaging - so make sure you know exactly how much you are going to need.
Consider the mortgage arrangement fees associated with each deal. Many variable-rate mortgages come without an arrangement fee, but most fixed-rate mortgages do carry them. If you’re willing to pay an arrangement fee, a fixed rate is probably worthwhile, since it gives peace of mind over how much you will pay each month, and can usually be added to your mortgage payments. However, if interest rates go down, you may end up paying more than you would with a variable-rate mortgage.
You will also need to consider any ‘additional’ services offered with your mortgage, particularly PPI (Payment Protection Insurance). If you can afford to pay the extra each month, PPI is worth having - if something occurs that prevents you repaying your mortgage, the insurance should cover your costs, often for over a year. If it’s going to be a burden on your finances, though, it may be worth waiting until you are in a better position financially.
Make sure you’re safe if your payments go up
This doesn’t apply to fixed-rate mortgages, since the payments are the same each month - but there is a risk with variable-rate mortgages that if the interest rate rises, so will your mortgage payments. Make sure you have room in your finances for any unexpected rises, and expect your disposable income to take a hit if they do.
Some lenders offer a ‘cap’ on their variable rates, which could help you plan for the worst-case scenario (i.e. rates are as high as they can go).
Check for early repayment charges
If you are hoping to pay off your mortgage early, some lenders will ask for an ‘early repayment charge’ (also known as a ‘redemption penalty’. The idea behind this is that it makes up for what the lender would have gained in interest, had you continued with the mortgage as normal. However, these most commonly apply during fixed rate or discounted rate periods and many lenders offer deals which don’t include such charges.
Avoid mortgages with annual interest
Some mortgages work out their interest on an annual basis, meaning the amount of interest you pay every month is based on the money you owe at the start of each year.
Mortgages with daily interest charge you interest depending on how much you owe at any given time, so as you pay off more of the mortgage, the interest decreases with it. This might not make a huge difference at the time, but over the course of your whole mortgage, you will end up paying a lot less in interest - and the mortgage can technically be paid off years earlier.
This article was written by Melanie Taylor, a remortgage expert at Think Money