Thinking of a remortgage? Perhaps you’re keen to reduce your monthly mortgage payments or looking to release equity to invest in that new extension you’ve been pondering. Whatever the reason, forward planning is essential.
It’s best to start the remortgage process early to avoid going onto your lender’s standard variable rate. Most mortgage offers are valid for 3-6 months, but some for up to 12 months. It makes financial sense to consult a broker a year before your mortgage expires to secure the best remortgage deal.
At The Mortgage Pod, we are regularly quizzed on the right time to remortgage, so we’ve put together this brief guide, which we hope you find useful.
When should I start the remortgage process?
To secure the most competitive deal and save money, at The Mortgage Pod, we recommend starting the search for a new mortgage deal around 12 months before your current mortgage expires.
While some lenders may extend mortgage offers up to 12 months (providing your circumstances don’t change), most offers are initially valid for three to six months. So 12 months gives your broker plenty of time to find the best remortgage deals with competitive mortgage rates.
If you choose not to take action, when your current loan expires, your existing lender will automatically transfer you to their standard variable rate (SVR). That could mean a substantial hike in your monthly payments – ouch.
How can I prepare to apply for a new mortgage deal?
To help oil the wheels and ensure your remortgage goes smoothly, it’s good to get organised early on. Here are a few pointers.
Check your credit score
We recommend checking your credit report before applying for a mortgage deal, remortgage or otherwise. Mortgage providers use your credit report to assess your affordability for a loan and may decline your mortgage application if there’s evidence of a few bumps in the road. By starting the remortgage process early, you may be able to boost your credit score and increase your chances of approval.
Make sure you’re on the electoral roll
Mortgage providers won’t just take your word on who you say you are, and rightly so! They will check your identity against the electoral roll. Making sure you’re registered at your current address will help improve your application.
Keep an eye on your spending
Pay close attention to your bank account activity in the months leading up to remortgage – you don’t want to give a lender any reason to question your affordability. Be sure to pay bills on time, keep your overdraft to a minimum and make sure there aren’t any excessive transactions that will excite an underwriter!
Just say no to the dream car finance deal
The latest deal at your local showroom may have caught your eye, but if it’s not essential, then resist, resist, resist! A new or recent credit application can impact your credit score, which may cause remortgage lenders to wobble.
Paperwork and documents
Dull as it may be, to speed up the remortgage process, gather all of your paperwork well in advance. Lenders will ask for evidence of income and outgoings, so pull together bank statements, payslips and things like SA302s.
How long does it take to remortgage?
If you are organised, the remortgage application process should take no longer than 3-5 weeks with most lenders. However, there are likely to be factors outside of your control, such as delayed processing times or the need for a property valuation if you switch lenders, so be prepared for this and have a buffer plan.
How long is a mortgage offer valid?
The length of time a mortgage offer remains valid depends on the mortgage lender. The following lenders’ offers are all valid for 180 days.
|Accord Mortgages||180 Days|
|BM Solutions||180 Days|
|Leeds Building Society||180 Days|
|Skipton Building Society||180 Days|
|The Mortgage Works||180 Days|
|Virgin Money||182 Days|
What else should I know about my mortgage offer expiry date?
Product completion deadline
Beware – the mortgage product and the expiry date of your mortgage offer may not be the same. If the snazzy new deal offered is only valid for 150 days, but your mortgage offer is valid for 180 days, then you will miss out after day 150 and have to move to an alternative product for the offer to remain valid.
Mortgage offer extension
Some providers will extend their mortgage offer for up to 12 months, providing that there have been no changes to your circumstances or financial situation. This is why the team at The Mortgage Pod recommends starting the remortgage process 12 months in advance of your current fixed-rate deal coming to an end.
Date of application or offer?
Some offers are valid for 180 days from the date the offer was issued, and some 180 days from the date the application was submitted. So be sure to know which date applies.
Is there a benefit to applying for a remortgage 12 months in advance?
Like a good scout, it’s best to be prepared! If you’re organised 12 months in advance of your existing deal coming to an end, you could potentially save more money and reduce the total cost.
Remember, interest rates can rise at any time, which has a knock-on effect on mortgage rates. When your new mortgage offer is issued, the mortgage rate is locked in, so you’re protected from any increases if the interest rate shoots up.
If interest rates reduce before completion, you can, of course, take full advantage of the lower rate to save money. The moral of the story is that it is never too early to accept an attractive mortgage offer.
At The Mortgage Pod, we “resource” at the start of each month for all of our clients for whom we have secured a mortgage offer but are yet to complete. Sometimes there are no changes, but other times there are valuable savings available, which could save thousands of pounds.
Can The Mortgage Pod help me work out the best time to start the remortgage process?
We most certainly can. It’s not always crystal clear what to do, when to do it and how – but one thing you can be clear on is our advice. We will look at your property value and your current mortgage debt, let you know if there are any early redemption penalties and give you an idea of your new monthly repayments.
Whether you’re ready to apply now or are still a few months away, it’s never a bad time to introduce yourself.
You can even join our free Remortgage Alert Service if you have over 12 months left on your current deal. We will track the dates and notify you when it’s time to start the remortgage process. Yup, it’s that simple, and it’s free.
It pays to be organised! At The Mortgage Pod, we can help you complete the necessary remortgaging work up to 12 months before your current deal expires and you find yourself falling onto the same lender’s SVR (standard variable rate).
As independent mortgage brokers, we have access to a wide range of deals on the market. Whether you’re looking for a new fixed-rate deal, considering a product transfer, or switching to a new lender, chat with us in advance, and we will help you understand your options.
What’s more, we’ll complete the mortgage application and other paperwork for you so you can relax or start planning that new extension… Sounds lovely, doesn’t it?
Get in touch via WhatsApp or phone today to speak to one of our friendly team, and let’s find you a brilliant new mortgage deal!
What are Early Repayment Charges (ERCs)?
An Early Repayment Charge (ERC) is a penalty charge that your existing lender may charge you if you end your current mortgage deal early. They are sometimes referred to as ‘exit fees’. It’s important to understand whether your current deal has an ERC, how much it is, and the deadline for paying it.
Once I have a mortgage offer, can I change it?
Absolutely, you can. Just because you have secured a mortgage offer, you don’t have to complete it. Things often change, your circumstances for one, but also the average mortgage rates. Mortgage lenders are competitive; they might offer one deal on Tuesday and a different one on Wednesday!
That’s why it’s important to work with a professional mortgage broker like The Mortgage Pod to be sure the best deal doesn’t get away.
How often can I remortgage?
You can remortgage as frequently as you like. However, depending on your individual circumstances, it’s likely most advantageous to remortgage every two to five years.
Is it possible to keep your current mortgage deal?
All mortgages have an expiry date. This can be for the lifetime of the mortgage, such as a lifetime tracker, but it is likely that your mortgage deal will expire before the maturity of the mortgage term, which means you’ll have to secure a new deal.
When your current deal ends, you will likely find yourself onto your lender’s standard variable rate, which may be a higher rate than you have been used to. So it’s a good opportunity to shop around for a new mortgage deal.
How often do mortgage rates change?
Mortgage rates change like the wind, sometimes daily. Lenders set their rates according to a variety of factors, including the type of mortgage (e.g. variable or fixed rate deals, interest only or repayment mortgage), the Bank of England base rate (which fluctuates on average every 6 weeks) and market activity. To avoid missing out on a good remortgage deal, it’s best to be prepared and secure a good rate as soon as it crops up.