Remortgage
What is a Remortgage?
A remortgage is when you already have a mortgage and your existing deal is coming to an end, so you need to move your mortgage onto another product to avoid going on to your lender's Standard Variable Rate.
Can I just stay with my existing lender or can I look at other deals elsewhere?
If you stay with your existing lender, this is known as a rate switch or product transfer. You will only be offered deals by your lender and not the wider market.
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It is normally prudent to see how the deals that your existing lender has to offer stack up against the wider market.
Veterinary Finances can assess all the options that are available to you and make a recommendation accordingly.
What's involved in a remortgage application? How long does it take?
A remortgage application will feel similar in many ways to when you initially bought your home. We will need to know details of your income, employment, outgoings and personal circumstances and will discuss your mortgage preferences in order to make a recommendation to you.
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Once we have discussed your circumstances and needs, we will ask you to provide the documentation required in order for us to submit your application to the new mortgage lender.
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With a remortgage, as you are changing which lender has the first legal charge on your property, a solicitor is needed. The solicitor will ensure that your current lender is paid off by your new lender and that the legal charge is properly updated with the Land Registry.
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Unlike a purchase, there is no need for searches to be performed or enquiries to be made (as you already own the property), so the amount of legal work required is a lot less and therefore a lot cheaper than with a purchase.
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The average time taken from start to finish with a remortgage is 2 months but we would recommend that you actually start the process much earlier, 6-7 months before your existing rate is due to expire​.
What are my options when it comes to solicitors?
When remortgaging a property, solicitors are required to carry out the legal work involved. The only exception to this is if you are switching mortgage rates with your existing lender or borrowing more money from your existing lender (in which case solicitors are not normally required). We need to know who you are using for the legal work as this goes onto your full mortgage application.
You can either source your own solicitors or we can provide a quote for you.
When you select your own solicitors, we cannot provide any support as no communication or updates will be provided to us.​​​
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When we have provided you with a quote for conveyancing through our selected providers and you have accepted this, we can liaise with the Conveyancer should you need our assistance.
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You may also have the option of using free conveyancing provided by the lender. We have no control over this and do not get updates as to the progress or when completion will take place. Please be aware this service can be slow and poor communication may be expected.
What products am I eligible for if the value of my home has increased?
If you have made home improvements or house prices have risen due to market factors, we need to determine which Loan to Value (LTV) bracket you are in. Your LTV is determined by your mortgage balance divided by the current value of your home (not the price you paid for it). Generally speaking, the lower your LTV, the lower your interest rate will be when it comes to remortgaging.
How does it work if I want to take money out of the equity I have built up in my home so I can make home improvements or buy a car?
As long as you meet the lender's eligibility and affordability criteria, then you should be able to release some of the equity that you have built up in your home so that you can use it for things such as home improvements or a new car. This means that you increase the overall mortgage balance compared to before and the mortgage lender will send the money that you release from the equity you have built up to your chosen bank account.
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There are alternative finance options to increasing your mortgage, such as a personal loan or a second charge, so you should consider your options carefully before committing to a higher mortgage balance.
Can I consolidate my other debts like credit cards or loans onto my mortgage?
Consolidating debt is not something that should be taken lightly as you are moving your debt from an unsecured to a secured basis. This means that your home may be repossessed if you don't keep up repayments on your mortgage or any loan secured against it.
Although it may be appealing to drastically reduce your overall monthly outgoings, by consolidating your debt, you are actually going to pay back more in total as the debt will be spread out over a much longer term. We will provide you with two mortgage illustrations: one showing you what the total amount of interest payable would be if you didn't consolidate any debt and another that shows how much interest will be payable if you do add your debt to the mortgage.
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Lenders will allow debt consolidation (often capped at 80% loan to value) and you need to pass their affordability and eligibility criteria.
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At Veterinary Finances, we treat each debt you wish to consolidate separately to ensure that consolidating each individual debt is a good outcome for you. For example, consolidating a 0% interest credit card is not likely to be something we would recommend.
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We need a thorough understanding of how each debt has mounted up and for each debt that is being consolidated, we will need additional paperwork (whether that's credit card statements, redemption statements for personal loans/car finance etc).
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I want to remortgage to pay off my Help to Buy loan - how does that work?
If you took out a Help to Buy equity loan when purchasing your property, you should have been told that you can either partially or fully repay the loan during the loan term. As the loan is only interest-free for the first 5 years, if you do not repay the loan within these 5 years, then you will start to pay interest on it. These interest payments do not reduce the amount you need to pay back.
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When remortgaging to pay off your Help to Buy loan, the amount you need to pay back is based on the value of your property at the time you want to pay it off. So if your home is worth more than what you paid for it, then the amount you pay back will be proportionately higher and vice versa if house prices have gone down.
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When paying off the Help to Buy equity loan, you need to get a valuation of your home carried out by a Royal Institute of Chartered Surveyors' qualified surveyor. The surveyor will visit your property and look for properties of a comparable size that have sold within the last 6 months and within 1/4-1/2 mile (normally) of your home to determine the value. The value that they provide is then used to determine how much the equity loan is that you need to pay back.
The cost of this survey is normally in the £300-£500 region. The valuation lasts for 3 months, so it is important to get the timing of it right taking into consideration when your existing mortgage rate is due to expire. You need to send a copy of the survey to the Help to Buy scheme administrators, along with a £200 admin fee.
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The ability to increase your mortgage to repay the Help to Buy equity loan will be based on lenders' eligibility and affordability criteria.
I want to pay off a lump sum so I borrow less when the remortgage completes. Can I do this?
Absolutely. If you haven't used up your current annual overpayment allowance, this may be one option. If you have used up your annual overpayment allowance or you wish to make a larger contribution to the mortgage balance, then you can send the funds to your solicitor who will then make sure that these get paid to your existing lender at completion, whilst avoiding any Early Repayment Charges or having to go onto your lender's Standard Variable Rate.
My circumstances have changed since I originally took out a mortgage. Am I able to extend or reduce my mortgage term when it comes to remortgaging?
Every time your mortgage is up for renewal, we will ask you for your most up-to-date information and figures and then work out whether we can shorten your mortgage term as this will reduce the total amount of interest payable to the lender. As we like to tie your mortgage term to your budget, any additional income you are happy to put towards your mortgage budget will help.
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If since taking out your mortgage, you have lost your job, reduced your hours, taken a pay cut or increased your outgoings (childcare, car payments you didn't have before etc) or if your employment status is not acceptable to a lender, we will talk through your options with you, including extending your term. If it's not feasible for you to remortgage elsewhere, then we will talk to you about switching rate to a new product with your existing lender.
What are my next steps?
Your step-by-step guide to getting a mortgage is below. We look forward to helping you when you're ready.
My mortgage doesn't run out for a while yet - when should we get in touch?
We would normally recommend looking into your mortgage options around 6-7 months before your current rate is going to expire. This is because a mortgage offer is typically valid for 6 months. So by securing a new deal early, we can lock in a rate for you and that is safe regardless of whether rates increase after that point. If rates go down, then we will advise you of your options and look to secure the lower rate for you.
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If life admin is not your forte, then why not use our Mortgage Reminder Service and we will contact you when it's time to start reviewing your mortgage.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY LOAN SECURED AGAINST IT.
Useful Documents and Resources:
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A step-by-step guide to
getting a mortgage
Click on each step for more information
Step 1: Discuss your requirements with us
Step 2: Gather documents and send to us
Step 3: Give consent for Decision in Principle
Step 5: Instruct solicitors for your mortgage
Step 7: Lender assesses your application
Step 9: Lender makes an offer
Step 11: Discuss protection needs
Step 4: Receive mortgage recommendation
Step 6: We submit your application to a lender
Step 8: Lender values the property
Step 10: Solicitor carries out legal work
Step 12: Mortgage completes
Types of Mortgage
Fixed Rate
The interest rate and monthly payment stay the same every month for the duration of your mortgage deal, which is typically fixed for between 2 and 10 years. At the end of your product term, if you do nothing, you will move onto the lender's Standard Variable Rate (SVR). Fixed rates are good if you want stability in payments without any surprises when it comes to budgeting.
Tracker Rate
The interest rate is linked to the Bank of England Base Rate so payments can vary throughout the product term. A tracker rate may be suitable for you if you're happy to take a risk with your monthly payments or need to make large overpayments to your mortgage as some tracker rates will allow for unlimited overpayments without penalty.
Standard Variable Rate (SVR)
This is the lender's variable rate that you would move onto once your fixed rate or tracker rate mortgage comes to an end. Lenders can change the interest rate whenever they like and there are very few occasions when being on the SVR is advisable.
Discounted Variable Rate
This is a variable rate set at a defined level below the lender's Standard Variable Rate for a defined period. So this rate can still go up or down based on movements to the lender's Standard Variable Rate.
Offset Rate
With an offset mortgage, the amount of interest you pay is based on the mortgage balance minus any savings you hold in a linked savings account. So if you took out a £150,000 mortgage but had £50,000 in a linked savings account, you would only pay interest on £100,000.
Payment Types
Capital Repayment
A capital repayment mortgage is one where each month you are paying off some of the amount you borrowed (capital) and some of the interest on the amount you borrowed. At the end of the mortgage term, you will own your property outright. This option is suitable for people who do not like risk and want to know their mortgage is fully paid off at the end of the term.
Interest Only
An interest only mortgage is one where each month you are only paying the interest on the amount you borrowed. At the end of the mortgage term you will still owe the original sum that you borrowed. This is a high risk option and is only suitable for those who have a suitable repayment strategy in place to repay the capital borrowed at the end of the mortgage term. Lenders assess the suitability of the repayment strategy (and we do not advise on their suitability) but these often include: sale of the mortgaged property; sale of a second property; a portfolio of stocks and shares with an equivalent (or higher) value than the sum borrowed; savings equivalent to the amount borrowed.
Part and Part
A part and part mortgage is where some of your mortgage is on a capital repayment basis and some of your mortgage is on an interest only basis. This is still a relatively high risk option and you will need a suitable repayment strategy in place to repay the capital borrowed on the interest only part at the end of the mortgage term.
Fees and Costs
Broker Fee
We don't charge a penny for our advice to anyone who is involved in the veterinary sector (just one of you needs to be if it's a joint application).
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For everyone else, we charge up to £299 on full application to the mortgage lender. This is non-refundable.
Survey Fee
When buying a property, it is advisable to have a survey carried out on it to check on its condition and to pick up on any potential issues. This is separate to the mortgage valuation fee and can be arranged independently by you. The Tier 2 survey is the mid-level report (previously Homebuyer's Report) or you can opt for a Tier 3 survey (previously Full Building Survey).
Mortgage Product Fee
Some mortgage products will have a 'booking fee' or an 'arrangement fee' which is essentially a fee for securing a particular interest rate. This can either be paid upfront or added to the mortgage (subject to affordability). If you add this fee to the mortgage then you will pay interest on the fee for the duration of the mortgage term.
Mortgage Valuation Fee
Some lenders will charge a fee to value the property you are buying or remortgaging. This varies from lender to lender but typically ranges from £0-£500. This is a basic valuation for mortgage purposes and is for the lender's benefit. It isn't a survey that will comment on the condition of the property.
Legal Fees
Whenever you buy or remortgage a property, then solicitors need to get involved. When buying a property, the solicitor will need to carry out searches on the property and make enquiries with the vendor's solicitor, as well as register your property with the Land Registry. With a remortgage, it's a lot more straightforward, so the costs are lower.
Stamp Duty Land Tax
You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland. The tax is different if the property or land is in Scotland (Land and Buildings Transaction Tax) or Wales (Land Transaction Tax). Your solicitor will confirm how much is payable.
Moving Costs
If you're moving home, it stands to reason that you will have furniture and other contents that you want to take with you. Some people may be able to do this themselves (possibly with the help of friends/family). Others will need to hire a professional firm to do this for them.
Buildings Insurance
Buildings insurance is a condition of having a mortgage. The cost of this will depend on the type of property you're buying, where it's located, local crime rates, the type of locks on the windows and doors, amongst other factors. We would recommend having buildings insurance in place from exchange of contracts.
Protection
We would strongly recommend having insurance (protection) in place so that if you are unable to work due to accident, sickness or injury. We would also recommend having insurance in place to clear the mortgage in the event of you contracting a critical illness or passing away. You should consider setting aside a protection budget when buying a property.