Remortgage approvals at highest rate since 2008
A remortgage is where you take out a new mortgage on a property you already own - either to replace your existing mortgage, or to borrow money against your property.
New data and analysis conducted by the Bank of England has shown that the rise in November’s mortgage approvals was driven by the continuing rise in remortgaging approvals.
Remortgages have new reached a level not seen since 2008. John Phillips, director of Just Mortgages and Spicerhaart commented “ It is no surprise that the value and number of remortgages was up in November. The industry was expecting a boom as many fixed rate deals came to an end.”
Reasons to remortgage
For the majority of people, their mortgage is their biggest financial commitment. If you’re the kind of person to shop around to get the best deals on everyday purchases, then you’re missing a trick by not using the same skills to save money on your mortgage.
There are pros and cons to remortgaging and it’s important to consider these before making a decision.
Many of the best mortgages only last a short time, often just two to five years, which is the typical length of time offered on a fixed rate, tracker or discount mortgage. When this comes to an end, your lender will likely put you on a standard variable rate, and it’s likely to be higher than your old interest rate. You need to be ready to remortgage at a cheaper rate, and it’s best to start looking around 14 weeks before your current mortgage ends. If you’re tied into an initial deal, then you may have to pay an exit fee, which is often around 2-3% of your remaining loan. Add an exit fee on top of this and you may think it’s not worth looking elsewhere. It’s still worth doing your sums, as if you have a large amount of mortgage debt, the savings can be huge.
Perhaps you’ve had a pay rise, and would like to overpay each month but your current deal won’t let you, or will only let you make a small overpayment. A remortgage will allow you to reduce the loan size and potentially get a cheaper rate as a result.
Alongside the reasons to remortgage, there are of course reasons not to:
If you owe around £50,000 then it my not be worth switching lender as you are less likely to a make a saving if the fees are high. Many lenders refuse to take on mortgages below £25,000.
If your financial position has altered since you took out your current mortgage, e.g if you have become self
employed then new lenders may not be prepared to offer you a loan because you no longer fit their criteria since rules introduced in April 2014 mean lenders MUST now see evidence of your new income.
Since the credit crunch, lenders have become more and more picky about who they lend to. As a result, lenders will require a lot of detail about your outgoings, and are looking for spotless repayment histories and a good record of handling debts well.
There are many other reasons why you should and shouldn’t consider remortgaging. For free advice please get in touch with Vince Hickman Mortgage Solutions of Wakefield on 01924 339572 firstname.lastname@example.org