Remortgaging in the UK
For those seeking a remortgage in the UK, the timing couldn’t be better. With interest rates at historically low and many different lenders in the business competing against each other for the opportunity to work with homeowners across the UK, it really is an excellent time to remortgage. Whether a homeowner is considering a remortgage because they have an Adjustable Rate Mortgage that is about to cause their payments to go up or for another homeowner who is simply looking to lower their monthly house payment, there is no time like right now to do so. That said, it is important to be careful while going through the process and be involved in the process from the first day of deciding to check into it to the day the paperwork is signed making the remortgage official.
Know Your Home
How many homeowners know exactly what their home is worth right now? The answer is virtually none because the housing market is always fluctuating. Simply because it is a specific season or a season is experiencing odd behavior, such as an extra cold winter or extra hot summer, can affect the value of a home by thousands, if not tens of thousands of pounds. Knowing the value of a home gives the homeowner flexibility and bargaining power with remortgaging companies.
For example, someone trying to do a remortgage on a home in the UK worth 250,000 pounds where they owe 220,000 pounds is going to have less chance of getting a good remortgage that is worth their time and effort compared to someone who did small upgrades to their home, timed the appraisal right and managed to increase the home’s value by even 10,000 or 20,000 pounds. On top of this, if a homeowner finds out ahead of time that they are going to be ineligible for a remortgage because they owe more than their home is worth, then that homeowner can stop working through the process of a remortgage at the beginning of the process rather than later on once an appraiser has come through on behalf of the remortgaging company.
Understanding what your home is worth can be done with some simple research or by securing the services of a real estate agent or simply hiring an independent appraiser ahead of time. For the homeowner willing to do the work themselves, the internet will help them access previous sales in the area so they can develop a list of comparable homes that have sold and for how much to help determine the value of their home. Real Estate professionals and appraisers do this all the time; after all, it is either part or their entire job on a daily basis. Hiring someone to do this work saves time and in the case of hiring an appraiser, often times will be the final appraisal on the home when the remortgage goes through.
Know What to Expect
Part of the research the homeowner must do on their own is to find a remortgage company to work with. They should not simply choose one at random but instead should look through multiple companies and a group of companies that offer the best interest rates, terms of the mortgage as well as the lowest closing costs. On top of this, researching the companies for reports of bad business practices and even fraud is vital to making sure that they get a company that is truly looking out for the customer when it comes to the customer’s remortgaging needs.
Many companies will offer special interest rates or special terms to lure customers in to using them as their remortgage company but will hide some of the fees associated with closing costs. When the customers get there to sign the paperwork, the cost of the deal goes up or the interest rate or terms of the deal change. By researching the business practices, customers can avoid these companies that change the rules on the fly.
Know Whether It is Worth It to Remortgage
People typically remortgage for one of two reasons. They either want to lower their monthly payment or they want to tap into the equity of their home without having a second mortgage. Either way, the reward is money in hand, versus being tied up in the mortgage. That said, if it does not make good business sense to remortgage, why do so? For those trying to lower their payment, the closing costs should be able to be paid for in less than a year of the savings from the old mortgage to the new and for those trying to tap into their equity, they need to get out much more than they put in and without their payment going up at all. If one of these criteria is not meant, then perhaps a remortgage should wait until the remortgage makes good fiscal sense.
Proceeding With the Remortgage
Once the homeowner has decided on a company to work with for the remortgage process, things go pretty quickly from there. The inspection and appraisal process is first, unless the homeowner and remortgage company agree to accept the homeowner’s private appraisal they had done prior to seeking out a remortgage. From there, the closing has to happen. For the homeowner, they should plan a few hours and go over every page of documentation.
Have the remortgaging company’s agent go through each page of the remortgaging closing documents and make sure that everything is correct. Also, even if they do not ask, be sure to initial each and every page of the documentation so that nothing could potentially be inserted later that did not get read or agreed to. If there are any mistakes or inconsistencies from what was agreed upon prior to the official closing, this is the time to bring them. If the agent says they will fix something later, insist that they do so while you are there so you can initial it. There are few lenders who would commit fraud but if something is wrong and the homeowner signs it, it is still legally binding.