If you’re looking into how to remortgage the good news is remortgaging is usually a simple process. And did you know there are lots of ways you can prepare now that may increase your chances of your application being accepted? Here’s what you need to do.
Check your credit report
When you apply for a mortgage the lender will check your credit rating and use this information as part of their decision-making process when it comes to whether to lend to you or not. Plus it can have an impact on the amount they’ll lend you as well as how much interest to charge. That’s why it’s vital that you add checking your credit reports to your remortgage checklist.
The credit reference agencies Experian, Equifax and TransUnion each have a credit report on you. These reports are easy to check online and you can do it for free. If you spot any errors in your reports make sure you get them corrected. And make sure you do everything you can to increase your credit score such as by ensuring you pay all your bills on time.
Beware of applying for credit before you remortgage
You should also be careful when it comes to applying for credit before you remortgage. This is because when you apply for credit a ‘footprint’ is left on your credit report – and these footprints will be seen by other companies when you apply to them for credit in the future. Too many of these footprints in a short period of time can give the impression that you’re either taking on too much borrowing or that you’re in need of cash. And this could mean a lender rejects your mortgage application. And there’s more bad news because if your mortgage application is rejected then it could make it even more difficult to get a mortgage with different lender too.
There are no hard and fast rules on how many applications for credit are too many or how long you should leave it before you apply for credit again. However, these footprints will be taken off your report after 12 months and lenders tend to pay less attention to searches that are over six months old. Also, some credit checks will have less impact than others.
But generally speaking, if you’re planning to remortgage it makes sense to be careful about what credit you apply for beforehand.
Remortgaging tips: Get organised
Do you have all your paperwork neatly filed and ready to pull out when you need it? If the answer is no, then spend some time digging out all the documents you’ll need for your remortgage now to avoid potential delays further down the line.
- Your last three months’ bank statements
- Your last three months’ pay slips and latest P60 form, if you’re employed, and proof of any bonuses
- Two or more years’ certified accounts and SA302 forms or tax year overviews if you’re self-employed
- ID (this is usually a passport)
- Proof of address (for example utility bills)
How to remortgage: Find out your ‘LTV’
You might have seen the term LTV when you’re researching mortgages, but do you know what it means? LTV is short for loan to value ratio and it’s a way of measuring the amount of money you’re borrowing compared to the total value of the property. And this figure is expressed as a percentage.
Providing you’ve been on a repayment mortgage and assuming your home’s value has remained the same or increased since taking out your last mortgage your LTV will now be lower.
And if you have a lower LVT you may be able to get access to more and potentially better mortgage deals. So make sure you add working out your LTV to your remortgage checklist.
When it comes to remortaging don’t leave it until the last minute. It’s a good idea to start the process 3-6 months before your current deal ends. There are a couple of reasons why this could be a wise move. By securing a deal now you’ll lock in a rate that could disappear in the future. Also by giving yourself plenty of time it means it’ll be more likely that you’ll move straight onto your new deal when your current one ends. This means you’ll avoid moving onto your lender’s standard variable rate which could be a lot more costly.
Remortgage tips: Choose your remortgage date carefully
You may need to pay an early repayment charge to your lender if you end your mortgage term early so it’s vital that you find out if this is the case because the amounts can be significant. This where an expert mortgage adviser can really help you because if you’re nearing the end of your tie-in period your adviser will ensure the date of your remortgage is set so you’ll avoid needing to pay an early repayment charge. And even if you’re in the middle of a deal your adviser can factor in any costs like an early repayment charge and will do the calculations for you so they can let you know if you could still save money by remortgaging.
How to remortgage? We’re here to help
Whatever stage you’re at, whether you’re ready to remortgage now or you just want to chat through your options, we have a team here ready to help so please get in touch with one of our expert mortgage advisers.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is £99.