First-Time Remortgage

What are the common reasons for remortgaging?

Remortgaging is essentially taking a new mortgage to replace the one you currently have.

The most common reason for remortgaging is securing a better rate. When your current rate or deal is coming to an end, you’ll want to avoid the lender’s follow-on rate, known as the standard variable rate. It’s usually much higher than new fixed or variable deals.

It may simply be that there are better rates available than you currently have – because rates are always changing. Or, you may also look at raising further funds for home improvements or consolidating debts, like credit cards and loans.

Another reason to remortgage is removing or adding someone to a mortgage. That’s quite common during divorce, separation and marriage. As you can imagine, there are quite a few reasons someone might remortgage – the list is pretty much endless.

How does the process of applying for a first-time remortgage work? How long does a first-time remortgage usually take from start to finish?

We have an initial conversation with our clients, request relevant documents and then research the most appropriate mortgages. We make a recommendation and then formally apply with a lender, who then carries out their checks – known as the underwriting process.

They’ll instruct a valuation of the property, too. Once that’s done, they’ll issue a mortgage offer, which is confirmation that they’re happy to lend to you on the property.

At that point, the legal work begins and the solicitors manage that side. We’ll help where we can, but there can be delays during this phase.

Typically, I’d say the whole remortgage process from start to finish takes between four and eight weeks. It will vary depending on the type of mortgage, any quirks with the property or if you’re on a certain scheme, like shared ownership, for example.

Are there any special eligibility requirements or criteria for first time remortgage applicants?

The obvious thing is that you need to own a property in order to remortgage. There aren’t any special rules for remortgaging. Lenders assess you as a new application, just like when you’re buying a property.

It’s the same underwriting process, with a valuation of the property and a look at your income, equity, credit profile and general affordability. There aren’t any specific eligibility requirements per se.

Should I stay with my current lender when remortgaging for the first time?

It depends on your circumstances and your objectives. This is essentially where your mortgage adviser comes into play.

Our job is to find you the mortgage that meets your goals and requirements. When ascertaining the options, we look at interest rates and product fees with a lender.

Lenders usually charge between zero and £2,000 as a product fee, depending on the type of product. They may offer certain incentives, like free legals or cashback. We also look at any early repayment charges that apply if you’re leaving your current deal early, and the total cost over the deal period.

It doesn’t just come down to the interest rate and monthly payment. All the things I’ve just mentioned factor into what actually makes it cheaper. It’s one of the reasons people use mortgage advisers, because there are so many variables to take into account.

What should first-time remortgage seekers consider when choosing a lender?

Other than the overall cost as I’ve just mentioned, it’s useful to consider flexibility features. These can include overpayment allowances and whether the mortgage is portable, meaning you can move it to another property in the future. Would any payment holidays be allowed? Those can give you a little bit of flexibility without impacting your credit file. It’s good to look at the borrowing criteria, especially if your circumstances have changed. For example, you might have moved from being employed to self-employed, or had a couple of blips on your credit file. A mortgage adviser would check all this for you and ensure that you’re fully informed to make a decision on what’s suitable. We take all the work out of your hands and just give you the options in plain, simple English.

How can a first-time remortgage affect credit scores and financial wellbeing?

When you apply, a lender carries out their underwriting checks. That involves a hard credit search, which can cause a small temporary dip in your credit score. Remember that multiple applications in a short time can have a larger impact on your credit file.

If you were to carry out a product switch, where you’re staying with the same lender and just selecting a new rate, that usually wouldn’t require a new credit search.

Ultimately, a remortgage can improve your long-term financial position, especially if you’re reducing what you’re paying each month, or it helps you to restructure debt. Some people look to raise money to consolidate debts, which can put them in a better financial position. We’ll always try to ensure clients will be better off long-term.