You can remortgage and look for a better deal straight away. You may have to pay a redemption penalty to switch deals.
Depending on the terms you may have to repay the value of the cash-back before you are allowed to switch mortgages. You may have to pay a redemption penalty to switch deals. If you decide to change your mortgage you should compare the potential savings against any costs of switching. A mortgage adviser can assist you with this.
Although it's often possible to save money by changing your deal, keep track of all the associated costs and make sure you are getting the best value for money. Some lenders offer specific remortgage packages where they pay for your legal and valuation fees, so all you need to do is compare monthly repayment costs.
If you are staying with your existing lender, then remortgaging should be relatively straightforward. Your lender will probably contact you before your mortgage term expires to talk through your options. If not, you can get in touch with them. But don't feel like you have to stay put - there are a whole host of lenders out there who may have a more suitable mortgage for you.
If you feel a bit overwhelmed by the choice, then you may like to enlist the help of a mortgage broker. Not only will they be more adept at finding the right mortgage for you, they also have access to products that aren't available direct to consumers. All mortgage brokers are regulated by the Financial Services Authority, meaning they are bound by a code to treat customers fairly. They have to find the deal that is right for each borrower and cannot just recommend products that may be lucrative for them. Bear in mind that they may charge for their services, which could be a factor in whether you choose to go it alone or not.
A remortgage is changing your mortgage without moving your home. Remortgaging is the process of switching your mortgage to another lender that is offering a better deal than your current lender thereby saving money. A remortgage can also be used to raise additional finances by releasing equity in your property.
When you remortgage you are ending your old mortgage deal and switching to a new one. This normally involves switching your lender although you can sometimes change deals with your current provider. If you do remortgage with your current lender it normally involves changing your existing deal.
Remortgaging can allow you to get a better rate of interest and reduce your monthly mortgage payments. A remortgage allows you to consolidate existing loans to one manageable monthly payment or raise money to buy a new car or home improvements.
Homeowners who want to raise money for home improvements, buying a car or other purposes often find that a remortgage to raise the money is cheaper than taking out a personal loan or using credit cards. This is because interest rates on mortgages are amongst the lowest of all the different types of loans. Homeowners may wish to raise money to consolidate other debts. By taking advantage of remortgaging your property you could transfer several debts into one more easily manageable remortgage.
Once you have decided to buy your first house your goal is not only to find the best rates but also to find the best mortgage to suit your circumstances and plans for the future. It is a good idea to sit down and write out your plans especially if you are planning to buy the house with a friend or partner.
Are you going to buy a small flat to get on the housing ladder with the intention of trading up to a larger house later or can you afford to buy a large house now? Do you intend to both work full time for the length of the mortgage or do you intend to have a career break and go back to college or perhaps you plan to have children in a few years time? A mortgage is a long-term commitment so some initial planning could save you time and money.
When you have your plans on paper calculate how much of your savings you will have towards the deposit. Don't forget to put aside money for the other costs in buying your home such as solicitor's fees and stamp duty and work out how much you will need for furniture and fittings. Finally write down your salary and any other sources of income, as this will influence how much you will be able to borrow. Traditionally most lenders would allow you to borrow up to three times your salary plus the salary of a second purchaser but with todays low interest rates and high house prices a few lenders have raised their limit to five times the first salary. If you are planning to take advantage of these loans make sure you are able to cover the payments if the interest rates go up.
Now that you know roughly how much you can afford is the time to start searching for the right type of mortgage for you. Your individual circumstances will dictate the type of mortgage you should have. There are two main types of mortgage a capital repayment and interest mortgage and an interest only mortgage.
A capital repayment mortgage is where the interest and the capital are calculated upfront and paid in equal instalments throughout the term of the loan. This type of loan is best for someone who is planning to stay in the house for a number of years this is because in the first few years most of the repayment goes towards paying the interest and only a tiny amount comes off the capital sum. So if you move after a few years you will find that very little has been paid off of the amount borrowed.
An interest only mortgage is where you pay only the interest and a separate policy such as an endowment, ISA or pension plan to pay off the capital amount at the end of the mortgage term. Endowment mortgages have had a bad name in the past as investments performed less well than expected and the endowment policies were returning sums much less than the amount they were supposed to cover.
Once you have decided the type of mortgage to suit your needs it is very easy to go online and search through a huge number of lenders products, and save yourself thousands of dollars on mortgage payments every year, but also, to save time and hassle by simplifying the loan process and reducing the paperwork.
Both Gen Wright & Carol Bell are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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