There is plenty of choice of new mortgages for those looking to switch their deal. So how do you choose which one is best for you?

The process of moving your mortgage from one lender to another, without moving house, is called ‘remortgaging’.

Many deals from lenders offer an initially attractive interest rate, but this can be short-lived. When the deal is coming to an end it is time to review the mortgages available. This should begin by looking at what the existing lender can offer, as the process can be faster and less hassle. This is because the lender knows you already and will often not need to re-check all of your personal details.

If the existing lender deals are not attractive, then a remortgage broker such as Andy Wilson Financial Services can be used to find a better scheme. A remortgage broker will have access to thousands of offers from alternative lenders and can match the best to your circumstances.

The last few years have seen many borrowers’ situations change, with redundancies causing lower income or other financial hardship. At the same time lenders have tightened their criteria as to who can qualify for their mortgages. A further problem has been falling house prices reducing the equity in the property. This can also take the percentage that the loan represents of the value out of the ranges offered by lenders today. In extreme cases, borrowers are suffering with ‘negative equity’ where the house value is below the amount of outstanding mortgage.

Other reasons for remortgaging include releasing money for home improvements, consolidating other high interest debts and making large capital purchases – holiday homes, cars and caravans for example. The amounts raised can often be on a shorter term than the main mortgage, similar to personal loan terms but at much lower rates of interest. With some mortgages you can also ‘overpay’ the required monthly payments, which will pay off the extra money even quicker.

However not all lenders will grant extra money for these purposes and so your remortgage broker will be able to find those that will, and can recommend the best solution.

What should you look for in a remortgage deal?

As mentioned, the headline rate is important but not the only important factor when choosing a deal.

Other things to consider will include whether to take a fixed rate or a variable rate such as a ‘tracker’ which follows movements in the Bank of England base rate. If you are on a fixed income or the mortgage payments take up a large part of your income, then perhaps a fixed rate might be best for you. But for how long? Deals can last 2, 3, 5 or even 10 years. A chat with your Andy Wilson will help to identify the best for you.

However, the Bank of England Monetary Policy Committee, who set the base rate each month, announced in April 20-13 that the variable base rate may not move again from its current level of 0.5% ‘until 2016’. So perhaps a mortgage interest rate deal that tracks this low rate could be best for you?

Having decided whether to fix or take a variable rate, Andy will then find the best scheme for you for your chosen type of deal. This will include measuring the ‘total costs’ of a deal over the product term. For example, if you chose a five year fixed rate, he would calculate the total you would be paying over that five year period including set up costs and monthly payments. A comparison of this scheme against all others could reveal which proved the cheapest for you.

To arrange a meeting with Andy or to ask any questions, please use the ‘Contact Andy’ form at the bottom of this page.


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