Teon Leggett: How to get the best remortgage deal

Understanding Different Remortgage Types

When it comes to remortgaging, choosing the right type of mortgage is essential for getting the best deal. Each option offers different benefits and potential risks, so it’s important to understand how they work and which one aligns with your financial goals. Here’s a quick overview of the main remortgage types:

Fixed-Rate Mortgages

A fixed-rate mortgage offers peace of mind by locking in a rate for a specific term, typically 2 or 5 years. This can be beneficial in times of fluctuating interest rates, as it ensures your monthly payments stay the same, allowing you to budget more effectively. However, early repayment charges can apply, so make sure this aligns with your future plans.

Standard Variable Rate (SVR) Mortgages

Often the default rate when your fixed term ends, an SVR mortgage can be expensive, as lenders can adjust the rate based on market conditions. The upside is flexibility; SVRs usually have no early repayment penalties, so you can pay down your mortgage faster if you’re in a position to do so.

Tracker Mortgages

Tracker mortgages follow a base rate (often the Bank of England’s), meaning your payments can fluctuate. This option can be cheaper if rates are low, but it carries some risk if rates increase. Some tracker mortgages include a rate “floor,” ensuring that your rate won’t drop below a certain point even if the base rate decreases.

Top Tips to Maximise Your Remortgage Savings

Tip 1: Know your current mortgage rate

This might sound like an obvious one, but you’d be surprised how many people don’t actually know what their current mortgage rate is. In fact, a study by Homeowners Alliance has found that more than 27% of mortgage holders have no idea what interest rate they’re paying on their current mortgage, so this is an important place to start. Make sure you’re armed with as much information as possible about your current deal, as this can mean the difference between saving hundreds of pounds, or missing a money-saving opportunity with your next deal.

To put this into perspective, here’s an example: if your current rate is 4% and you find a 3% deal, you could save approximately £1,000 per year on a £100,000 mortgage.

Tip 2: Boost Your LTV Ratio by Getting Your House Valued

Your property’s value plays a significant role in determining your loan-to-value (LTV) ratio, which influences the rates lenders offer. A lower LTV can unlock better deals, so it’s worth scheduling a valuation. If your home’s value has increased since your last mortgage, you could find yourself eligible for a lower rate.

Tip 3: Organise Your Finances and Minimise Debts

Lenders review your finances to ensure you can manage mortgage repayments, so it’s essential to tidy up your financial profile. Start by checking your credit score and tracking your outgoings. Cancel unnecessary subscriptions, settle outstanding debts, and review bank statements to minimise expenses.

If you share finances with anyone (like a joint account with a former partner), their credit could affect yours. You can request a Notice of Disassociation from credit agencies to remove outdated financial ties.

Remember, even with imperfect credit, mortgage options are available. Consider learning more about these options to make the best choice for your situation.

Quick Fixes:

• Review and cancel unused subscriptions.
• Avoid new debt or significant purchases before remortgaging.

Tip 4: Understand Fees vs No-Fee Mortgages

Most mortgages include arrangement fees, but some “no-fee” options eliminate this cost in exchange for higher interest rates. While no-fee deals reduce upfront expenses, they may cost more over time. Compare the overall costs of each option to choose what best fits your budget and goals.

Example: For a £200,000 mortgage over 5 years, compare a 1.9% rate with a £1,000 fee and a 2.1% “no-fee” option. The 1.9% deal may save on monthly payments despite the upfront fee, while the 2.1% deal offers savings upfront but may cost more in total over the term. Calculating the full 5-year cost of each will help identify the better long-term choice.

Tip 5: Consultant an Advisor Earyl