Your Rights When Remortgaging

Remortgaging is commonplace these days - in fact according to some reports, half the mortgages taken out in Britain are actually remortgages. Since the process can be as simple as switching your credit card, why not? There are plenty of low rates available it seems and it's an excellent way of getting your hands on some of the equity in your house.

What is a Remortgage?

Essentially, remortgaging is where you replace your current mortgage with a better one. It can mean spending less each month, getting money for home improvements or consolidating your debts and it's a great way of saving yourself money. The thing to remember is that your debt is secured by your house and you'll need to keep up your mortgage repayments or you could lose your home.

What to Do

The first step is to obtain a "redemption statement" from your current lender. This is where you'll find all the details about your mortgage.

You also need to read the small print on your present mortgage. That's where you'll find the details of any penalties you might have to pay for switching (as a hint, avoid any mortgages with extended redemption penalties).

With remortgages so common, a number of lenders have raised their fees for the closure of a mortgage, so you should also ask about fees first.

Selecting a New Mortgage

There are many options when looking around for a new mortgage. You can research online, using mortgage calculators. You can also use the services of a mortgage broker, but it is also advisable to do your own research.

After you've come up with a good deal, why not go back and talk to your current lender? They might be able to offer something that matches it and you won't need to pay any fees for switching. If they can't, go ahead and move your mortgage.

It's going to cost you some money to take out a new mortgage. You'll probably have to pay an application fee first. Then there's the application form to be filled out, with all the details about your income (the usual bank statements, payslips, proof of identity and so on). After that comes the home valuation, which will probably cost between £200 and £300. Finally, you'll have to pay an "arrangement fee," which runs to about £300 and the legal costs, which can add yet another £350 (although some lenders do offer remortgages with free legal work and valuations).

The process takes around a month. As long as the lender's surveyor is happy with the value and condition of your home, you'll get a "mortgage offer of advance." From there, things are done between the two lenders and all you have to do is wait for a completion statement, which will either come from your new lender or solicitor.