Best remortgage deals will save money if you can find them.
One of the primary reasons to consider a remortgage is to get a better deal and save money. A remortgage deal with a 1% drop in the current rate can save around £125 per month on a mortgage of £150,000. A mortgage is simply the biggest financial commitment that needs regularly reviewing to ensure the best deal is had.
It’s important to point out at this stage that there can be quite high set up fees for the remortgage and possibly redemption fees with the existing mortgage. That isn’t all bad news but the sums need to add up to ensure that over a given term the remortgage is actually viable and saves money. For example a tracker mortgage with a low rate fixed for a year and a high setup fee may have a sting in the tail when the rate reverts to the standard variable rate which isn’t very competitive.
Lenders used to fall over each other to offer great remortgage deals but since the credit crunch this has changed and finding good deals has become hard. 125% mortgages are effectively a thing of the past and now lenders are looking to lend as small a percentage against the property value as possible. So the very best deals around could be at around 60% loan to value (LTV). The sting in the tail in the current climate is that falling house prices may affect the LTV – the drop in property value will offset against the mortgage repaid meaning that without realising it a higher LTV remortgage is required to pay off the existing mortgage. Currently that can be a very difficult product to source.
As a rule of thumb the higher LTV for the remortgage deal the higher the interest rate is likely to be. Those with a poor credit history in the sub-prime market are likely to be stung with extremely high rates considering the base rate is currently 0.5%.
When looking for a remortgage going back to the current lender is an option and a good starting point but the lender will only offer their products. To get access to the full market of products a good mortgage broker is the fuller solution. Not only will they be able to view the whole market for the best remortgage deals but their clout with the lender may help clinch the deal quickly and effectively.