Why Remortgage? The Good Sides

People choose to remortgage for several powerful reasons:

1. To Save Money: This is the #1 reason. Securing a new deal with a lower interest rate can slash your monthly payments and save you thousands over the term.
2. To Release Equity: Your home may have increased in value. Remortgaging can allow you to borrow more (based on your home's new value) to release a lump sum of cash for home improvements, a new car, debt consolidation, or other major expenses.
3. To Get Different Features: You might want to switch from a variable to a fixed rate for security, or find a deal with more flexible overpayment options.
4. To Pay Off Your Mortgage Sooner: By securing a lower rate, more of your monthly payment goes toward the capital, helping you clear your debt faster.

The Other Side: Potential Downsides & Costs

Remortgaging isn't free, and it's not always the right choice. It's crucial to weigh up the costs:

1. Early Repayment Charges (ERCs): If you leave your current deal before the term ends, you'll likely face a hefty fee, often a percentage of your outstanding loan.
2. Arrangement/Product Fees: The new lender will charge a fee for their new mortgage product.
3. Legal & Valuation Fees: You'll typically need to pay for a solicitor and a property valuation for the new lender.
4. Stress and Paperwork: It involves an application process almost as thorough as your original mortgage.

The Golden Rule: Your savings from the new, lower rate must significantly outweigh all these combined costs for remortgaging to be worthwhile.

How Does Remortgaging Work? The Step-by-Step Process

1. Review & Research (3-4 months before your deal ends): Check your current mortgage statement for your ERC end date and current rate. Start looking at new deals on the market or speak to an adviser.
2. Get Advice & An Agreement in Principle: A whole-of-market broker, like Rock Finance, can compare thousands of deals you can't see online. They'll get you an Agreement in Principle (AIP) to confirm what you could borrow.
3. Formal Application: Once you choose a deal, you submit a full application. Your adviser will handle this with the lender.
4. Property Valuation & Legal Work: The new lender will value your home. You'll appoint a solicitor to handle the legal transfer of the mortgage.
5. Offer & Completion: The lender issues a formal mortgage offer. Your solicitor coordinates with your old and new lenders to "redeem" the old mortgage and start the new one on your chosen date.

Does Remortgaging Affect My Credit Score?

This is a common concern. The short answer is yes, but usually in a minor and temporary way.

1. When you apply for a new deal, the lender will perform a "hard search" on your credit file, which leaves a footprint and can cause a small, temporary dip.
2. However, this is normal for any credit application. The impact is minimal if you are only applying for one new mortgage.
3. Crucially, staying on a costly SVR and struggling with payments would damage your credit score far more in the long run. A successful remortgage that lowers your bills demonstrates good financial management.

Ready to Explore Your Remortgaging Options?

Don't let your mortgage drift onto an expensive rate. A quick review could save you a significant amount of money each month.

Contact Rock Finance today for a free, no-obligation remortgage review. We’ll scour the market, weigh the costs, and find out if you could be on a better deal.