There are several mistakes that are frequently made when remortgaging. We go through the top seven remortgage mistakes that we see and explain how to avoid them.
Remortgaging is often beneficial, giving you the chance to move to a better deal, to reduce or increase the amount you borrow as your circumstances change and allowing you to have a different mortgage term, depending on how quickly you are able to repay your loan.
To ensure that you make the most of a remortgage and that the process goes as smoothly as possible, avoid the most common remortgage pitfalls.
1. Not using an experienced independent mortgage broker
With a huge range of products available, it is difficult to identify the best option. Finding the right deal can potentially save you a large amount of money over time, so it is often worth asking an expert to help you.
An experienced independent mortgage broker will work with you to identify the most appropriate type of mortgage for your circumstances, such as a fixed-rate, discounted or tracker mortgage, and whether a repayment mortgage or interest-only mortgage will be best.
A broker will take into account a range of issues, such as whether you may want to move fairly soon, in which case a five-year deal might not be the right choice, or whether you are able to overpay your mortgage sometimes, which could save you money if you have a deal which allows this.
2. Staying with your existing lender
While it may be easier to stay with your existing lender, this is often not the most beneficial option. Even if they offer you a better deal than your existing mortgage, it is worth shopping around to see if you can find anything preferable.
3. Waiting until your existing deal ends to take action
It will take time to arrange a new mortgage, so you may want to start looking a few months before you reach the end of your existing deal. You should note that you will probably need to wait until your deal ends to complete your remortgage however, to avoid paying exit penalties.
Having a new deal lined up will mean that you can move to this promptly, avoiding being transferred to your existing lender’s standard variable rate, which is likely to be more expensive.
4. Not checking your credit score and taking steps to improve it
You are advised to check your credit score well in advance of applying for a mortgage. Check your details as held by the main credit agencies, Experian, Equifax and TransUnion, to make sure there are no mistakes in their records. If there are, raise an appeal with them asking them to correct these.
Have a look to see if there are opportunities to improve your credit score, for example, by:
- ensuring credit cards and other bills are paid on time
- having a credit card that you use regularly and pay off on time, demonstrating that you are able to manage credit well
- closing credit cards that you do not use
- using no more than 25-30% of your available credit limit
- cutting financial ties, such as joint credit facilities or joint bank accounts, with anyone whose credit score is poor
- making sure that you are on the electoral roll
5. Not preparing your paperwork in advance of applying
You will need to provide your new lender with a substantial amount of paperwork when you apply for your mortgage. Making sure that you have this ready to go will help avoid delays. If your lender is very busy, they may take several weeks to process your application. Getting your documents in order early on can ensure that they don’t have to come back to you with queries.
You can usually check on your new lender’s website exactly what they will want to see. It is likely to be identity documentation, proof of your address and proof of your income. If you are remortgaging a flat, you will need to have a range of information available in respect of the lease and management company, including buildings insurance details, annual accounts and confirmation that ground rent and service charges have been paid up to date.
6. Taking out a loan right before you make your mortgage application
Taking out a loan right before you apply for your mortgage can be damaging to your credit score and is best avoided if possible.
7. Not using experienced remortgage solicitors
You will need a solicitor to represent both you and your new lender in your remortgage. Using an experienced remortgage solicitor can help ensure your transaction goes smoothly. Your solicitor will need to carry out similar due diligence work to when you bought the property as the new lender will want to know that the property is good security for their loan.
Expert remortgage solicitors will be able to deal with any complications promptly and effectively, avoiding potentially expensive delays in completing your transaction.
Contact us
If you would like to speak to one of our expert property lawyers, ring us on 0333 3055 189 or email us at info@lpropertylawyers.co.uk
