Teon’s top tips on how to get the best remortgage deal

Thinking about remortgaging? 

You’d be in good company. 

Over 800,000 people in the UK are expected to remortgage over the next year, and the number one priority for anyone is going to be finding the best remortgage deal. 

Whether your current mortgage term is coming to an end, or you’re remortgaging early to switch to a better deal, you’ll want to make sure you’re well prepared and have as much information as possible in order to make the best decision. 

Before you get going with all your research, check out our managing director’s top tips for securing yourself the best remortgage deal.

Types of remortgage deals

You’ll find a number of different mortgages available on the market, each with their own pros and cons. The type of mortgage you’ll want will depend on your own individual circumstances and your goals for the future, so be sure to think about what’s most important to you personally before locking in a new deal.

Most common: fixed-rate mortgages

In essence, a fixed-rate mortgage means that your monthly payments will stay the same until an agreed date, no matter what happens to interest rates in the market during that time. Fixed-rate mortgages are available for a range of different terms, with the most popular options being two and five-year terms. The main benefit of having a fixed-rate mortgage is knowing exactly what your repayments will be over a set period, allowing you to budget accordingly.

Risk vs reward: standard variable rate (SVR) mortgages

This is your lender’s default rate, and they tend to be the worst value mortgages on the market. Each lender has an SVR that they can change whenever they like, and it’s typically more expensive than other rates on the market. The SVR tends to roughly follow the Bank of England’s movements, though this isn’t always the case. 

You’ll usually be moved onto your lender’s SVR when your existing mortgage deal has come to an end, which it’s why it’s important to plan ahead when your fixed term is ending. While this isn’t the most popular mortgage out there, one of the advantages of being on a standard variable rate mortgage is that there usually aren’t any early repayment charges, which means you pay be able to pay your mortgage off faster than you would with other deals.

Lifetime or ‘term’: tracker mortgages

As the name suggests, a tracker mortgage tracks the movements of another interest rate – usually the Bank of England base rate, plus a set percentage.
This essentially means that your monthly repayments will move up and down in line with changes to interest rates. Tracker rates will usually change the month after the base rate has moved, and some tracker deals will come with a ‘floor’ which the rate won’t sit below, even if the base rate falls below this level.

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.

Tip 2: Get your house valued

The value of your home will directly impact what sort of deal you’re able to get. Mortgage lenders will often ask for a property valuation so that they can determine how much your property is worth, which then allows them to assess the loan-to-value (LTV) ratio. This figure helps your chosen lender to measure the risk they’re taking on when approving a remortgage for you; the higher the LTV, the greater the risk for the lender, because they’re lending a higher percentage of the property’s value. Essentially, the lender needs to know that the property is adequate security for the mortgage.

Tip 3: Get your finances and outgoings in order

Lenders will want to check your typical outgoings to make sure there’s no cause for concern and to make sure you can afford the monthly repayments on your mortgage. This will involve examining bank statements from the last three months for both personal and business accounts, as well as credit checks and any outstanding debt.

You’ll want to make sure your finances and credit score are in a healthy place prior to applying for a remortgage, whether you’re switching or looking for new rates from your existing lender. 

One of the most important things you can do is know exactly what your outgoings are. It can be easy to forget about the rogue store cards or old direct debits, so keeping track of your finances and minimising anything that could be unnecessarily increasing your outgoings will help when it comes to securing a new deal. 

Remember, If you have financial ties with someone, their credit rating can directly affect yours. For example, a joint bank account or credit arrangement with ex-partners, housemates, family or friends. You can ask credit reference agencies to issue a Notice of Disassociation to let lenders know that you’re no longer financially associated with that person and make sure your credit score isn’t suffering as a result. 

While you want your credit score to be in the best place possible, it’s also not impossible to get a mortgage with bad credit. Learn more about applying for a mortgage with bad credit here.

Tip 4: Understand fees vs no-fee

Most mortgage deals – regardless of which type of mortgage you choose – come with arrangement fees. These fees are somewhat self-explanatory – they’re charged by the lenders to essentially arrange and set up the mortgage on your behalf, and can range from £500 to over £2,000. 

Lenders now often use a no-fee mortgage to attract new customers, meaning the borrower will pay less when they take out the deal. While it can be helpful to avoid a hefty upfront fee, it’s also important to remember that no-fee mortgages tend to have higher interest rates, and are likely to be more expensive in the long run. You’ll want to make sure you explore the pros and cons in full before committing to any type of deal.

Tip 5: Speak to an advisor early

You’ll want to start looking for a remortgage deal around seven months before your current mortgage term ends, and it’s a wise idea to enlist the help of an independent financial expert during this time, rather than going directly to the bank or lenders themselves. 

One of the key benefits of speaking to a financial advisor is that they’ll have a much wider view of the market, and they’ll have access to a greater range of deals and rates than any individual lender could offer. Having a financial advisor on board will also spare you the time-consuming process of approaching lenders individually, as they’ll have all the information you need in one place. An advisor will essentially do all the research for you, and they’ll support you in making the best financial decision for your personal circumstances.

Need help finding the best remortgage deal?

If you want someone to analyse the market and do all the hard work for you, Lendese has got you covered.

Our team of qualified financial experts will work with you from start to finish; guiding you through each stage of the remortgaging process until you’ve secured the deal that works best for you. 

Ready to get started, or looking for a little more information? Get in touch today and we’d be happy to help.