When you’re on a fixed rate mortgage, it’s important to start your remortgage well in advance of your fixed rate expiring. This allows you to secure a new mortgage product, preventing you slipping onto the lender’s standard variable rate (SVR) when your current deal ends. SVR will be a considerably higher interest rate so it is best avoided where possible.
The remortgage process allows you to look across the market for the best new deal. While much can be altered as part of a remortgage, this blog focuses on when to start the remortgage process.
As mentioned, the very latest you should start thinking about your remortgage is in time to get it all sorted before your current deal expires. Typically, we would advise allowing three months for this, just in case there are any unforeseen delays. However, why not get it sorted sooner? Most lenders’ mortgage offers stay valid for six months. This means it would be sensible to start the process six months before your current deal expires. If your remortgage is due mid-2022, you want to be getting it sorted early in the new year!
While getting your remortgage sorted early saves you stress, it could also save you money, especially with mortgage interest rates on the rise! When you apply for your mortgage, you secure the interest rate available at the time of application. If the bank raises its mortgage interest rates between you submitting the application and completing the remortgage, you are not affected by this. Conversely, if interest rates are falling, the bank you applied to may drop their rates after you’ve submitted a mortgage application. Your broker should be aware of this and then able to switch you to the lower rate where possible. Securing a low rate early or changing to lower rates that become available after application can save you a significant amount on your monthly payments.
Remortgaging also provides the perfect opportunity to review your mortgage. Do you want to borrow more for an extension, another property purchase or to consolidate debt? Do you want to pay off a lump sum while not incurring any early repayment charges between mortgages? Do you want to increase or decrease your mortgage term to adjust your monthly payments? Your mortgage should be made to work around your financial circumstances, you shouldn’t need to be living around your mortgage payments.