How To Secure The Best Remortgage Rates In The UK?
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Quick Answer: To get the right remortgage rates in the UK, start comparing new deals at least 4-6 months before your fixed-rate mortgage ends. Check your loan to value, calculate your total mortgage cost, and work with a Fee Free Mortgage broker with whole of market access to find the most suitable remortgage deal.
Suppose you are looking for the best remortgage rates in London. You have a balance of £200,000 on your current mortgage and 6 months before your fixed-rate period ends.
Your existing mortgage lender send you a remortgage due reminder. A mortgage broker finds you a remortgage deal with a different high street bank whose interest rates are lower but charges a £999 product fee.
This is when remortgaging can get really tricky. Our remortgage guide can help you to understand the process and steps needed to remortgage.
The best remortgage rates for a homeowner it all depends on the deals they have at their disposal and the cost of remortgaging plus their personal circumstances.
At times, a new mortgage deal with a lower interest rate may not be the best option due to high overall costs.
So, if you are looking for the right remortgage deal, factor in the cost of switching to the new mortgage along with the new interest rate. Other important factors that matter include your loan-to-value (LTV) ratio, early repayment charges (if any), mortgage term, product fees, and legal fees.
Some of the step involved securing best remortgage deals
Start your remortgage search early
You can improve your remortgage options just by starting early. Homeowners often procrastinate and end up settling with whatever deals their existing lenders have for them.
Most borrowers start remortgage process before their fixed-rate period ends and the standard variable rate (SVR) starts. In such a case, start looking for new deals at least 4-6 months before your fixed-rate period ends. This gives you enough time to compare remortgage deals and decide if you want to switch to a new lender or remortgage with same one.
An early search also gives you a buffer against rate changes. If you secure a suitable remortgage deal before the rates rise, it will protect you from paying more. If rates fall, some lenders may allow you to switch to a better product before completion.
In both cases, an early decision keeps you in a better position.
Leaving your decision to the final week is always riskier. You will automatically shift to an SVR mortgage, following which your mortgage rate will be at the mercy of changing market conditions (and your lender's interests).
Prepare on documents required for remortgaging
The remortgage process with a new lender will involve an income assessment, credit checks, ID verification, and an assessment of your monthly expenditure.
Having all the required documents ready can help minimise delays. Some of the documents required for a remortgage include:
- Copy of ID
- 3 months' payslips if employed
- SA302 and tax overview if self-employed
- Bank statements
These are the minimum documents required to initiate the remortgage process. However, if you remortgage with the same lender on a like-for-like basis, you may not need to provide the same documents.
Work with mortgage broker
Having a mortgage broker on your side when remortgaging can save you a lot of time and money. Mortgage brokers can compare the best remortgage deals available across the whole market, including deals from your current lender. They can prepare the application and submit it to your chosen lender on your behalf.
If you are unsure whether you should stay with your current lender or switch to a new one, your mortgage adviser can help you decide. Many mortgage brokers offer a fee-free remortgage service, which can save you hundreds of pounds.
How your LTV can get you a better remortgage deal
Your Loan to value is an important factor that determines what is your loan to value bracket which is how lenders price their mortgage products. Lower the LTV better the rates.
Before you remortgage, you can calculate your LTV using this formula:
Outstanding Mortgage / Current Property Value x 100
For example, if your current mortgage balance is £240,000 on a property worth £320,000, your LTV will be 75%.
Lenders often group borrowers into different LTV bands. Being in a lower LTV band gives you access to cheaper mortgages rates.
Your LTV is likely to decrease if you have paid a significant portion of your balance since your first mortgage. It can also decrease if your property's value increases over time.
So, you can end up in a different pricing band by the time you choose to remortgage.
If you want a better remortgage deal, ensure that you make regular mortgage payments and reduce your balance as much as possible. Also, check comparable property sales and improvements to confirm that your lender's valuation accurately reflects your property's market value.
Compare the total cost, not just the interest rate
Many homeowners focus on the mortgage rates being highlighted but not the cost associated with it.
For example a 4.5% mortgage is not automatically cheaper than a 5% mortgage.
It is the total cost that makes all the difference.
Suppose you have two options:
- Option A: 4.5% with no product fee
- Option B: 4.3% with £1,999 product fee
Going solely by the interest rate, Option B seems like a better deal. However, factoring in its product fee wipes out the benefits of a lower interest rate.
A low-interest mortgage product can still carry a high overall cost.
It is always better to consider the following before choosing the right remortgage deal in the UK:
- Interest rate
- Monthly repayment
- Product or arrangement fee
- Legal costs
- Valuation fee
- Early repayment charges
If you are working with mortgage broker then they can compare this for you.
Do not ignore early repayment charges
Even if you have an attractive remortgage deal at your disposal, early repayment charges (ERCs) can spoil your savings.
Lenders typically charge ERCs if you end your mortgage before the fixed-rate period expires. They are often calculated as a percentage of the outstanding mortgage balance. This implies that they can get quite expensive.
Remortgaging is not always about changing your mortgage lender
Never ignore your existing mortgage lender while remortgaging. Sometimes, the best remortgage rates might come from existing lender.
Remortgaging with the same lender is called a product transfer. It is a much simpler and more lenient process, involving less paperwork than remortgaging with a different lender.
Your lender is likely to offer a remortgage deal before your fixed-rate period ends. Neither ignore it nor accept the first offer you receive.
Work with a trusted mortgage broker like MariannaFS to explore multiple deals across the market before making a final decision.
Whole-of-market advice matters
Whole-of-market mortgage brokers in the UK get you the most suitable remortgage deals from multiple lenders across the market. They are independent professionals who aren't affiliated with specific building societies or high-street lenders.
Depending on your circumstances and remortgage preferences, they will help you compare deals and make an informed decision. No Fees Mortgage brokers also help you make your application, whether you stay with your existing lender or switch to a new one with out charging fees.
The final word on how to secure best remortgage deal
If you are looking for a single best remortgage rate in the UK, know that it doesn't exist.
The best way to find an ideal remortgage deal is to consider the overall cost of switching to a new deal. While interest rates matter, they are just one of many factors that should influence your decision.
Seek professional help and start as early as possible to make a well-informed decision.
MariannaFS, do not charge broker fee for mortgage advice. Talk to our friendly advisor today to find best remortgage rates. It is easy to get started just complete a form, WhatsApp us and someone will get in touch to give you impartial remortgage advice.
