When deciding whether or not to remortgage, it’s important to analyse your individual financial situation. When interest rates are low, lenders offer appealing remortgaging packages, and borrowers are enticed to free up cash or just save money on monthly payments. The Bank of England’s base rate is undoubtedly one of the most important factors to consider when remortgaging your home, and unlike other factors such as your credit score, market research, and understanding the full details of your current mortgage arrangement, the base rate is one area where you, as a borrower, are at the mercy of the markets.

Examine all of your remortgaging possibilities thoroughly

You have the option of remortgaging with your current lender or approaching a new bank or building society for a new offer directly or through a mortgage broker. Take the time to explore all of your options to increase your chances of getting the best prices. This could take a few weeks and some time-consuming application processes. You can even seek the guidance of experts like estate agents in Sittingbourne to recommend the mortgage lender for you. But, in the end, the decision you make is critical, so set aside the necessary time to arrange your future finances.

Examine your credit report

If you’ve never had any debt in your adult life, it doesn’t mean you’re a good candidate for a mortgage. Your credit report includes details about past credit cards, loans, overdrafts, mortgages, and utility payments. This may not seem relevant on a daily basis, but it is the most accurate way for a lender to determine your ability to repay your mortgage, and it will have an impact on the refinancing deals available to you. A high credit score will persuade lenders that you have the financial means to repay the loan, thus opening the door to better terms.

When should you apply for a remortgage?

You must be totally confident that you have chosen the proper mortgage for you by the time you apply. Multiple applications will lower your credit score, and you may be charged for getting a rate during the application stage. Without actually applying, all lenders offer an Agreement In Principle, which is designed to give you a good indication if you are likely to be accepted for a product. Don’t make a hasty decision because you might find a better deal after doing some more research.

Pay attention to the fine print

Remember that remortgaging isn’t always the most cost-effective alternative. Are there any early repayment penalties on your current mortgage? These fees are likely to be triggered if you remortgage and switch lenders, so check with your broker or lender to see what penalties you might face for making early payments before presuming you’ll save more money with the new mortgage than it’ll cost you to get out of your old one.

How much money do you require?

Every lender calculates how much they will offer you and what kind of contract you will finally get in a different way. Salary, commission, investments, family status, and any recurring fees or outgoings will all be taken into account. When a homeowner needs to borrow more money than their present lender can provide, they may consider remortgaging. In this case, switching lenders may allow you to borrow more money while also allowing you to qualify for better rates. If you need to remortgage in order to borrow more money, be sure you have your numbers straight before you start exploring.

Reduce your LTV as much as possible

Your LTV, or loan-to-value, is the amount of money you owe compared to the value of your home. You have a 90% LTV mortgage if your deposit was £10,000 and you took out a mortgage to cover the rest of your £100,000 property purchase. The most important thing to know is that the lower your LTV is, the less risky it is for the lender to provide a loan against your home. In the end, the more money you put down (and the lower your LTV), the better discounts you’ll be able to get.

What is the value of your home?

It should go without saying, but be sure you know how much your home is worth. This will be the starting point for your conversation with possible lenders, who will then send out their own independent valuers to validate the value. If the value of your home has declined after you took out your original loan, you might want to hold off on remortgaging until prices have recovered. A refinancing offer will be based on the LTV, much as the initial loan. If prices in your neighbourhood have declined, the amount you owe on your mortgage will be a higher percentage than it was before, requiring a higher LTV than your initial mortgage.

Should you remortgage your home?

If interest rates are low, now can be a good time to consider remortgaging, but make sure you understand how changing interest rates will affect your future repayments. You should take the same amount of time when picking a remortgage loan as you would when purchasing a home. Remortgaging, like any major financial choice, should be approached with caution and thought for the long term consequences. When feasible, get professional guidance and do your best to properly research the market.