When considering a remortgage you will see a lot of advice. Some are for a remortgage and some are against a remortgage. A remortgage can be very beneficial but there are some times when it may be unnecessary or even damaging for you to remortgage. So, it should be carefully considered before opting for it. Throughout the process of remortgaging there are some tips you should adhere to in order to get the most of your choice. Each step should be followed in order to ensure you actually need a remortgage and if you do, that the terms you are getting are the best possible ones. The following are the top five remortgaging tips you should follow:
1 – Determine your goals for a remortgage
Why exactly are you considering a remortgage in the first place? There are several reasons someone may want to have a remortgage and the type you decide on will depend greatly on why you need it. SO outline your primary goals before you move forward. Are you remortgaging to get a reduced interest rate on your current remortgage? Are you attempting to attain additional cash so that you can pay for a large expense and use your property as equity in a loan? Do you need to lower your monthly payment to deal with a change in your financial circumstances?
A remortgage may cover more than one issue but it is important to identify the issue that is of primary concern for you. This will keep you focused on your goal and not get bogged down with other deals that may seem advantageous but actually do not address, or do not best address, your primary goals. If you identify then concentrate on your goals you will be able to ensure they are met to the best of your ability.
2 – Understand the different types of remortgages that are available
Just as when you were shopping around for your original mortgage on your home and were faced with various options so too will you be faced with options regarding a remortgage. There are various types of remortgages and they all have different advantages and disadvantages. A fixed rate remortgage may be beneficial if the interest rates increase but what if they go down? How about a capped rate remortgage?
When you start talking to lending institutions make sure you get information on all the terms and discuss the pros and cons of each type of deal. Always conduct your own individual research in addition to what your finance officer informs you. Check the Internet to see others’ opinions on the type of remortgage you are considering and if it will properly address your primary goal.
3 – Shop around to find the best terms
Keep in mind that different lenders will have different options and each lender is in a different position to offer you different terms. Some lenders are not concerned with quantity of remortgage business but quality so will be extremely rigid with their terms. However, others may be highly competitive and willing to negotiate even if you are not as low a risk as may be desired. For example, one lender may find your credit score below par and give you unfavourable terms. However, another lender may want your business and be willing to give you better terms than the first to garner your business.
Collect various quotes and then share them with other lenders to get the best possible terms for you. Some lenders will compete with one another to attract your business. This is highly favourable to you because you are sure to get the best possible terms based on your situation and credit score.
4 – Check your credit before shopping around for a remortgage
The better your credit, the more options you will have. If you have poor credit then your options will be more limited and you will have to shop around to lending institutions that specialize in poor credit remortgages. However, there are also instances where there are errors on your credit report that may affect your credit rating. Make sure you pull a copy of your credit report before you start shopping around to various lenders. This will accomplish two goals: first, you will know what area you will have to look in and second, you can address any errors immediately.
If there are errors in your credit report you can address them immediately, collecting proof and contacting the credit reporting agencies to make corrections. Once you do this you can take copies of your evidence of errors to lending institutions so they can adjust accordingly. If you simply have poor credit you may be able to concentrate payments on those areas that would be easy to catch up. Although it won’t improve your score significantly it will show an effort and ability to pay your bills.
5 – Understand the terms you are agreeing to
Remortgaging can be a fairly complicated process. There are a lot of terms that will be bandied about and one of the most important aspects of securing a remortgage is to make sure the terms meet your goals. You may need to employ use of a remortgaging calculator to see exactly where you are and where you will be if you agree to the terms that are proposed. At first glance a remortgage may seem highly beneficial but after you completely analyse the numbers you may find that it is not quite as favourable to you as you first thought.
Always keep in mind your original goal. If, for example, your goals is to reduce your interest rate, it may be very tempting to agree to a remortgage where it seems as if you will save a lot of money. But due to the terms and lengthening the time on the note you may actually pay more in the long run. You may see an immediate reduction in your monthly payment but you are not getting any real advantage. Instead, ensure your interest rate is truly reduced and you save money over the course of the loan in its entirety.