Considering a remortgage is a major decision. There are calculations to be made and analysis to be done of your current deal compared with a possible new deal. There are costs of a remortgage which need to be considered in order to justify going through with it. The process itself has cost associated with it, and then of course is the interest rate which is attached to it. To make the best decision possible, do your research, consider multiple deals, and calculate all savings which will take place more than once.
Current Mortgage
Most current mortgages have fees attached to them if the mortgage is paid off early. The fees may be called early exit fees, or early termination fees. This fee is important because it is often not considered when looking at the big picture of changing into a completely new mortgage deal. Staying with the same lender while going through a remortgage of your home has its advantages. This may be one of them. It is common for lenders to sometimes waive the early repayment fee if you stay with them into a remortgage. This will be brought up during the negotiation phase of the remortgage. Typically, when going with a new lender there will be early exit fees. This is simply so the lender can recoup some of the cost they will not be getting because you will not be in the loan to the completion of its term.
Check with your lender to make certain you are aware of the fees associated with the remortgage. This will need to be calculated in with all the other fees of the remortgage.
New Mortgage
The new remortgage loan product will have cost associated with it simply to secure it. These fees will be called arrangement fees. There will also be a fee for the legal aspect of the remortgage. The legal fee covers any cost associated with your lender securing legal counsel. If a problem ever arose in connection with your remortgage, the cost would be covered. This seldom happens, but it is a fact of life. Next, there are valuation fees which are connected to the valuation and appraisal of the property to be remortgaged. This fee covers the cost of an outside entity to appraise the property. Together, these fees are referred to as set up costs. These fees can be quite expensive, so do not let them slip by without you evaluating them to make sure your remortgage is still a wise decision.
When doing research towards a remortgage, do not get pulled into a lender who claims to be fee free. There is a fee to everything, so beware. When a lender claims to be fee free, there is typically something in the fine print which could set you up to be misinformed. Remember, if something sounds too good to be true, it usually is.
Calculations
Calculating a remortgage is a tedious process. Make sure the figures are double and triple checked. This is a lot of money that is being talked about. In addition to checking the figures multiple times, let someone else look at them as well. Also, when evaluating the remortgage as a whole, don’t forget about all the fees involved.
Finally, only remortgage if it is in your best financial interest to do so. Let no one pressure you into doing something you are uncomfortable with. A remortgage can make a major difference in your financial future.
