Are you coming to the end of your mortgage deal and considering remortgaging? It’s important to be aware of the common mistakes that homeowners make when remortgaging, so you can avoid them and make the best decision for your financial future.
In this article, we’ll outline six mistakes that people often make when remortgaging and provide tips on how you can steer clear of them.
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Failing to shop around
When remortgaging, many homeowners tend to stick with their current lender or simply take the first offer that comes their way, without exploring other options. However, failing to shop around for the best deal could cost you in the long run.
Different lenders offer different interest rates, fees, and terms, so it’s important to compare them to find the best deal for your needs and financial situation.
By taking the time to shop around and compare deals, you can find a remortgage that suits your needs and saves you money in the long run. Remember, a lower interest rate is not always the best option if it comes with high fees or unfavourable terms, so be sure to read the fine print and consider all factors before making a decision.
Ignoring fees and charges
When comparing remortgage options, it’s important to look beyond just the interest rate and consider all the fees and charges associated with the new mortgage. These fees may include arrangement fees, valuation fees, legal fees, and other charges that can add up quickly and impact the overall cost of your remortgage.
Arrangement fees, also known as booking fees or product fees, are charged by lenders to set up the mortgage and can range from a few hundred to thousands of pounds. Valuation fees are charged by lenders to determine the value of the property, and can range from a few hundred to over a thousand pounds.
Legal fees are charged by solicitors or conveyancers to handle the legal aspects of the remortgage process, such as transferring the mortgage from one lender to another.
When comparing remortgage options, make sure to ask about all the fees and charges that come with the new mortgage, and factor them into your calculations. It’s also important to consider whether you can afford to pay these fees upfront or if you’d prefer to add them to your mortgage balance and pay them off over time.
By considering all the fees and charges associated with the remortgage, you can make an informed decision and avoid any surprises or unexpected costs down the line. Remember, the lowest interest rate doesn’t always mean the cheapest overall cost, so it’s important to take a holistic view of the fees and charges associated with each option before making a decision.
Clients may be focused on securing a lower interest rate in the short term, but it’s important to consider the long-term impact of the new mortgage. This includes the total cost of the mortgage over its lifetime, the length of the mortgage term, and the impact on monthly payments.
Not checking your credit score
When applying for a remortgage, it’s important to have a good credit score, as this can impact your ability to secure a good deal. Lenders use credit scores to determine the risk of lending to a borrower, and a poor credit score can lead to higher interest rates or even rejection of the application.
Before applying for a remortgage, it’s a good idea to check your credit score and ensure that it’s in good shape. You can obtain your credit report a credit reference agency, such as Equifax, Experian, or TransUnion.
If your credit score is low, there are steps you can take to improve it before applying for a remortgage. These may include paying off outstanding debts, making sure that you’re registered on the electoral roll, and avoiding applying for too much credit at once.
By checking your credit score and taking steps to improve it if necessary, you can increase your chances of securing a good deal on your remortgage. It’s also a good idea to consult with a mortgage broker, as they can help you find lenders that are more likely to lend to you based on your credit score and financial situation.
Taking on too much debt
When remortgaging, you should be careful not to take on too much debt, as this can lead to financial difficulties in the long run. It’s important to consider other debts, such as credit cards and loans, and to ensure that the new mortgage payments are affordable.
Taking on too much debt can put a strain on your finances and make it difficult to keep up with monthly payments. This can lead to missed payments, late fees, and even default, which can have a negative impact on your credit score and financial stability.
Before remortgaging, it’s important to take stock of your overall debt load and ensure that you can afford the new mortgage payments.
This may involve consolidating other debts or paying off outstanding balances before taking on a new mortgage. It’s also a good idea to create a budget and stick to it, to ensure that you can afford your monthly payments and other living expenses.
When considering a remortgage, be sure to factor in any fees or charges associated with the new mortgage, as these can add to the overall cost of the loan. A mortgage broker can help you compare different mortgage options and find the one that best fits your financial situation.
By being careful not to take on too much debt and ensuring that the new mortgage payments are affordable, you can avoid financial difficulties and achieve greater financial stability in the long run.
Not considering your future plans
it’s important to think about your future plans and how they may impact your mortgage needs. For example, if you’re planning to move home in the near future, you may want to consider a portable mortgage that allows you to transfer your mortgage to your new property without penalty.
Similarly, if you’re planning on changing jobs or transitioning to a new career, you’ll want to consider how your income may change and whether your new mortgage payments will still be affordable.
It’s also important to consider any potential changes to your family situation, such as having children or taking care of elderly relatives, and how that may impact your mortgage needs.
Taking the time to consider your future plans can help ensure that you choose the right mortgage option that fits your long-term needs and goals.
Not seeking professional advice
When considering a remortgage, you should consider seeking professional advice from a mortgage broker. These professionals can provide valuable insight and help clients find the best deal for their financial situation.
A mortgage broker can help clients navigate the complex mortgage market and understand the different options available. They can also provide guidance on factors such as interest rates, fees and charges, and repayment terms, to help you make an informed decision.
Additionally, a mortgage broker can help you with your remortgage application and ensure that it’s completed correctly and submitted on time. They can also help clients prepare for the application process by ensuring that they have all the necessary documents and information.
It’s important to choose a reputable professional with relevant experience and qualifications, such as a mortgage broker who is regulated by the Financial Conduct Authority (FCA).
By seeking professional advice, you can make a more informed decision when remortgaging and ensure you find the best deal for your financial situation.
We’ve covered some of the common mistakes that people should avoid when remortgaging, but there may be others that we haven’t mentioned. If you want to learn more about how to avoid these pitfalls and make informed decisions, please don’t hesitate to contact us.
At Thameside Mortgages, we have a dedicated team of professionals who can help you navigate the remortgaging process. Whether you’re looking to switch to a better deal or release equity from your property, we can provide expert advice and guidance tailored to your individual needs.
You can reach us by phone at 03455 120 125, use our contact form on our website, or via our online chat feature. We’re here to answer your questions and help you make the best decisions for your financial situation.
We look forward to hearing from you and helping you achieve your remortgaging goals!