Debunking the most common remortgaging myths

Remortgaging is often considered a complex and costly process, but those thoughts couldn’t be further from the truth.

In fact, remortgaging can save considerable amounts and ensure you get the best deal on the market. The Q3 remortgaging statistics for the UK paint the same picture, with buy-to-let remortgaging, in particular, showing strong growth. Take July 2018, for instance, with more than 46,900 remortgages completed within the month, making it the strongest July in a decade for the market. 

With these statistics in mind, remortgaging in Q4 is expected to continue on this upward trend. However, there is still a long way to go in explaining the process, which is why we are debunking the common myths surrounding remortgaging. 

Myth #1: You shouldn't ever remortgage

One of the more common misconceptions about the remortgaging process as a whole is that it should be a last resort. Likewise, that you should only consider remortgaging your home if you need the credit. However, every homeowner coming to the end of their fixed-term mortgage should consider their remortgaging options. 

Generally, most fixed-term mortgages offer the same interest rate for a period of around two-five years. However, once this term is up, you will be placed on their standard variable rate, which could see you paying more interest and your mortgage becoming all the more expensive. Therefore, you should always shop around for the best deal when it comes to remortgaging. In fact, seeking remortgaging advice could offer the financial stability you need. 

#2: Remortgaging will cause debts 

Seeking to remortgage your home will certainly not increase your debts, quite the opposite. One of the reasons so many homeowners undertake the remortgaging process is to save money - especially as we are coming ever closer to the holidays… Replacing your current mortgage with a better one can result in lower interest rates and monthly repayments. However, you can also remortgage to raise credit to pay off some of your debts, but we suggest looking into mortgage broker advice before doing so to ensure you are heading in the right direction.

#3: You should rely on your current lender

As mentioned above, you should never solely rely on your current lender. When your fixed-term mortgage period ends, you will be placed on the standard variable rate. Essentially, this means higher interest rates. Similarly, in no way are you tied to your current lender for your entire mortgage but are well within your rights to look around and hunt for remortgaging advice. Speaking to a mortgage broker, in particular, will provide you with a number of options you may not have seen when dealing directly with a lender. Some mortgage brokers may even get you an exclusive deal with a lender. You can read more on the benefits of mortgage broker advice here. 

#4: Remortgaging is complicated 

There’s no denying that the remortgaging process is slightly more complex than staying with your current lender, but the benefits far outweigh the time searching for a deal. The trick for remortgaging is to start early, around three months before your mortgage ends. We also suggest seeking remortgaging advice with mortgage brokers as to the best deal in the market, as well as other financial advice. 

If you are shopping around for the greatest deal, however, your first step is to speak to your current lender for any offers on new deals. These offers can then be used as a benchmark when comparing products from other lenders. 

When you do your comparisons on remortgaging offers, don’t just focus on the interest rate. Look to see the fees attached to the remortgage, along with the time period to pay back and the monthly repayments. If you are still unsure, we suggest seeking mortgage broker advice to ensure you have covered all terms and conditions within the deal. 

#5: Remortgaging is impossible with bad credit 

Bad credit doesn’t mean it is impossible to remortgage. While it is possible that the best deals in the market are not available, prior planning means it’s likely you can settle on a product that suits your financial situation. Although, be aware that your lender may charge you a higher interest rate for poor credit. 

If you go to a mortgage broker, they will be able to point you in the right direction for deals you will likely be approved, without negatively affecting your credit score. You can also speak to your bank with regards to credit and whether you are likely to obtain finance. Again, this shouldn’t affect your credit score. 

Before you do any of the above, get a free credit score check through the likes of ClearScore to get an idea on your file and what you can do to start improving your credit history. 

#6: There is no benefit 

Remortgaging actually offers you plenty of benefits and, most importantly, could save you money. In some cases, remortgaging will provide you with access to further equity, such as if your home has increased in value. This equity could then be released through the remortgaging process and used for home improvements to further increase the value. 

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