Remortgaging usually means changing your deal; either via switching to a new lender, or by moving onto a new deal with your existing lender.
The FCA’s Mortgage Market Study estimates that 800,000 borrowers could make average savings of £1,000 by switching their mortgage.
However, the survey suggests that many home owners are missing out on better deals because of their misconceptions about what remortgaging involves and how it would be perceived by others.
Some common misconceptions include:
Remortgaging won’t make much difference to my finances
Gas fills and spacers
In actual fact, remortgaging could potentially save you a lot of money.
When you first take out a mortgage, you’ll usually be on an introductory deal for an agreed amount of years. But when that deal comes to an end, you’ll most likely be moved to your lender’s Standard Variable.
I shouldn’t remortgage until my current mortgage deal runs out
In some situations, you’ll still save more money by remortgaging early, even if your current mortgage deal is still running.
As mortgages have an early repayment charge (ERC), in some cases the amount you save by remortgaging will outweigh the costs of paying the charges.
Credit scores don’t matter when remortgaging
Regardless if you have kept up with your mortgage payments so far, a bad credit score can still have a negative effect when you come to remortgage. The best route is to check your credit score at least 2 months before you are planning to remortgage. This allows enough time to fix any problems that might be flagged up.
In a recent report, Moneysupermarket head of mortgages Jameel Lalani says: “It is true that remortgaging can mean borrowing against your property – which might be an option for people who want to pay for home improvements or other debts.”
As always, please do your research, speak to your lender and figure out your options before jumping to conclusions.
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