The truths behind remortgaging

Warren Lewis
22nd January 2018

After the 2017 Base Rate rise – and the predictions that it may rise again – many homeowners will be considering remortgaging to lock into a fixed rate. But for many, remortgaging is a tricky topic to understand. Will it actually save you money? Is it the right time to do it? Will you have to pay extra fees?

Leeds Building Society unearths the truths behind the common misconceptions.
1.Does remortgaging actually make a difference to my finances?

Answer: It’s possible to save a lot by remortgaging. When you first take out a mortgage, you’ll usually be on an introductory deal that tends to last 2, 5 or 10 years. But once that deal ends, you’ll most likely be moved to your lender’s Standard Variable Rate (SVR). SVR’s can sometimes come with much higher interest rates, so by remortgaging to a new deal you can potentially cut a big chunk off your interest rate.
2. Should I wait until my current mortgage deal runs out to set up a new one?

Many homeowners think that the early repayment fees on their mortgage make remortgaging a bad move financially. But in some cases, the potential savings you’ll make by remortgaging will outweigh the cost of the fees.
Before you decide to remortgage, make sure you’re fully aware of any early repayment fees you may have to pay, and do the maths to figure out what the best option is for you.
3. Will there be hefty solicitor’s fees to remortgage?

Not necessarily.  Many lenders pay the legal fees for you when you remortgage, but check that this is the case before you go ahead and remortgage.
4.  Will my credit score be taken into account?

Yes. If you have a bad credit score, it will have a negative effect when it comes to your remortgage, even if you have kept up with your mortgage payments so far.

If you’re thinking about remortgaging, check your credit score a couple of months beforehand to give yourself time to improve it.  

5. Should I remortgage to a fixed or variable rate product?

There are a range of different mortgage product types, and none of them is necessarily better or worse than any others. Fixed rates offer security – you know your rate won’t go up – but it also means your rate won’t go down. Depending on the economic climate, having a fixed interest rate can be a good or a bad thing.

“Variable rate” mortgage is an umbrella term for a number of mortgage types, including tracker and discount mortgages. The interest rates on these mortgage types can go up or down.

There’s a lot that goes into finding the right mortgage product, including interest rate, fixed or variable rate of interest and fees. Make sure you take all these things into account before you make a decision.

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