Sat 18 Jan 2020
What are the Top Considerations when Getting a New Mortgage?
by naomi fiddes-baron
Sometimes, you will want to re-mortgage when your current term is coming to an end. Alternatively, maybe you want to release equity in order to pay off other, more costly debts such as credit cards, or to make another significant purchase.
Whatever your reason for re-mortgaging, make sure you’re fully informed and avoid making any potentially costly mistakes.
Don’t Take the Easy Option.
Staying put with your current lender will reduce your admin time by, oh, roughly 100% if you simply let your mortgage drift onto a variable rate. You will likely find this level of inactivity will cost you in higher monthly repayments.
We also advise you not just to stick with your current lender on a new product. Remember that the mortgage world is a competitive one, and your current lender may not be able to match or improve on other offers out there with different providers.
Mortgages are much like insurance products. They will have various features that aren’t always like for like to compare. For example, it might not actually be the best idea to pick the product with the lowest monthly payments. You could find that a slightly higher monthly payment will enable you to reduce your overall term by a few years, which will save you a lot more money in interest applied over time. While your current lender may offer a reasonable retention product, such as a more favourable rate if you stay with them, you'll tend to find the best deals are available when you switch lender.
Give yourself Plenty of Time
We recommend starting discussions with your mortgage advisor at least 6 months in advance of when you plan to re-mortgage your property. Lining up a new deal no less than 3 months in advance means you will ensure yourself a competitive interest rate and, crucially, avoid the same trap as doing nothing entails, namely overrunning the end time and having to make monthly repayments on a higher variable rate.
Always Factor in the Fees
There are associated fees with mortgages, whether you’re being charged for an early termination, or an arrangement fee. Now, sometimes it makes sense to roll any fees into the mortgage product, and sometimes it is a better option to pay these out of hand. You mortgage advisor will definitely be super useful here, to help you decide which is the best option for you.
Don’t Guess at Facts and Figures
The market will have changed since you bought your house. Whilst you might have a good gut feel about what the current value of your property is, you will need an accurate valuation to know exactly how much you can spend or save with your new mortgage. Sometimes, getting an up to date valuation on your property might really surprise you, and fuel a decision to physically move property altogether, if the value has significantly gone up. Oulsnam can give you an instant valuation here, but do get in touch with your local sales office if you want a full, professional valuation on your home.
A correct valuation is also important if you want to release any equity. But by doing this, you need to be aware that you will be taking out a larger loan and paying more interest over time and in some cases, it may be cheaper to secure a short-term bank loan if you want to do home improvements or pay for a holiday.
Choosing a mortgage from the wide range of products available can be a daunting task. Added to that there are now many more rules for building societies and banks to consider before the can offer a person a mortgage. Robert Oulsnam and Company is not owned by a bank or insurance company and are therefore we can introduce clients to independent mortgage advisors. So, get in touch if you are thinking of re-mortgaging and want some professional advice.