Thinking of remortgaging?

When your fixed rate mortgage deal is coming to an end, it may be time to think about switching to another product. With interest rates still low, remortgaging to a better deal could potentially save you £100s or even £1000s over the long term.

Remortgaging can also be used to release equity from your home to pay for large expenses such as home improvements, but it may not be suitable for everyone, and there are several possible pitfalls to avoid.

For example, don’t just accept the new deal offered by your current lender. It might be quick and easy to do so, but you’d be overlooking 1000s of other deals from other lenders.  The mortgage market is competitive, and so taking the time to explore other options, especially with a broker could save you a lot of money.

One thing you should discuss with your broker is the overall cost of the mortgage rather than just choosing the best rate. You need to take other aspects of the deal to into account such as:

Arrangement fee – an admin charge from the lender to cover the arrangement costs. Sometimes deals with low rates come with high arrangement fees

Exit fee – If you remortgage in the future, your lender may charge a fee to close the account

Overpayments – Making overpayments can shorten the term of your mortgage and save you a lot of money. But how much will your lender allow you to overpay?

Early repayment charge – If you want to remortgage before the end of the term of the product you may have to pay an extra charge

Legal fee – You need to bear in mind what the conveyancing costs are of remortgaging

Valuation fee – How much will your lender charge you for valuing your property?

It helps to consider your short and long term plans. For instance, if you’re planning to move home in two years you might want to opt for a two year deal rather than a five year one which may require you to pay an early repayment charge. It’s difficult to predict what you’ll be doing in a few years’ time, but trying to plan ahead as much as you can could help to save money.