Over the past couple of months the base interest rate in the UK has fallen by a massive 2% in total, and this is likely to have brought huge relief to many consumers who have variable rate mortgages and have seen their rates rocket over the past couple of years. Not all banks will necessarily pass on the full rate cut to consumers, and because of this many may decide to remortgage and find a more competitive provider to service their mortgage.
If you feel that remortgaging could be a viable option for you to help you to save money there are some things that you should bear in mind to avoid being charged over the odds on your mortgage deals. Remember, the purpose of remortgaging is to save money on your mortgage, and this is why it is important not to rush into signing up for a deal with a new provider.
One of the most important areas to look at when you are considering remortgages is the rate of interest that each lender charges, as some may not pass on all or any of the recent base rate cuts. Lenders will want a deposit from you in order to give you a new mortgages, and these deposit requirements can vary from one lender to another, so this is another area that you need to compare.
Another thing to bear in mind is that many lenders will charge arrangement or set up fees for remortgages, and again these can vary from one lender to another. Remember, some lenders may try and entice you by offering a tempting APR but charging an astonishingly high arrangement fee, so don’t rush into a deal based solely on the interest rate.
You may find that your existing mortgage provider will charge you an early redemption fee for paying off your existing mortgage early, and this is also something that you will need to check before you commit to remortgaging. Only by checking on these settlement figures, and by comparing interest rates and arrangement fees from new providers, will you be able to determine whether remortgaging is actually going to benefit you.
One thing that will affect how much you have to pay each month by way of mortgage repayments is the amount of time over which you take the mortgage loan, otherwise known as the repayment period. With this in mind you should also ensure that you compare the repayments periods on offer from different lenders before you make any commitment.
Your credit rating will go a long way towards determining how much you will be charged in terms of interest on your new mortgage, and those with bad credit will pay a far higher APR than the typical one advertised. In the current financial climate there is also a strong chance that you may not be able to get a new mortgage loan at all, with lenders very wary about lending to those with damaged credit.
The good news is that you can easily compare lenders and remortgages online, so you won’t have to go to too much trouble to see whether there is a better deal out there.