How much does remortgaging cost?
What is home repossession?
If you continue to not meet your mortgage repayments, then worst-case scenario, your home could be repossessed.
If your lender has tried to help you but all options fail, or perhaps you haven’t let them know about your situation at all, then your lender has the right to take your home from you. Often, the house will be put up for auction in order to sell it as quickly as possible. If they don’t get enough money from it to pay your outstanding mortgage balance off, then unfortunately, you will continue to be chased for the rest of the money. If your home is repossessed, your name will be permanently on a register which will make it extremely hard to ever get a mortgage again.
If you can see your situation heading down the repossession route, it’s best to consider selling the house yourself (as we mentioned earlier), as you’re likely to get more money for it then the lender will at an auction. Once it’s sold, you can then move into a cheaper property, or rented housing.
Our preferred choice, and no doubt yours too, would be to avoid finding yourself in arrears in the first place. How can you do this? By taking a closer look at your finances.
Look at how much money you have coming in a month and make a list of all the outgoings you can possibly think of. Obviously, bills are bills and will always need to be paid, but hopefully, this will highlight any flexible outgoings you have and areas where you could potentially cut back on, for instance socialising or food shopping. Using a budget planner can certainly help get you started with this.
Top tips to avoid getting into arrears
Remortgaging is something that most of us have to do, especially if you took out a fixed rate that’s now come to an end, or perhaps your circumstances have changed and your current mortgage isn’t right for you anymore. But, believe it or not, a lot of people actually stick with the mortgage deal they’re on, perhaps because it’s less hassle for them, or because of the cost they think is associated with remortgaging.
In this article, we’re going to run through the different fees you could potentially incur when remortgaging. But please don’t take this as gospel because everyone’s situation is different, and it really does depend on factors such as what mortgage deal you’re currently on, or what the lender’s criteria is, to name just a few.
Don’t fall at the first hurdle when remortgaging by only looking at the rate. Interest rates are low at the moment, however, it’s just as important to consider the fees you might have to pay, as sometimes, this can outweigh the benefits of the low-interest rate.
There are various different fees associated with remortgaging. As we mentioned earlier, it’s not as black and white as saying you’ll have to pay all of these fees listed below. It very much depends on your individual situation, but as a rough guideline, here are the fees that could be applied when going through the remortgage process.
This is a cost you pay to your new lender for arranging your mortgage deal and can also be referred to as a product fee. The amount you pay will depend on the lender but as a general rule of thumb, the lower the interest rate on the mortgage, the greater the arrangement fee.
There are usually two ways you can pay this fee, either upfront as a lump sum or by adding it onto your mortgage. It might seem a bit steep to pay it out all in one go at the start, but remember, if it’s added onto your mortgage you’ll have to pay interest on it, so it’s worth considering which option is right for you.
When remortgaging and moving from one lender to another, there’s a legal fee that needs to be paid to your solicitor for the work they carry out for things such as, conveyancing and valuations. The fee for remortgaging is less than if you were moving house, as there’s much less work involved.
Early repayment charges (ERC)
If you want to leave your current mortgage deal before it finishes then you may have to pay a charge to your lender, which is known as an early repayment charge. If your current deal has already ended and you’re now on a standard variable rate (SVR), you won’t have to pay an ERC.
When remortgaging to a new lender, they will need to carry out a valuation of your house to see how much it is worth, and you’ll be charged for the fee. Sometimes this is included in the deal so make sure you check first with your lender.
Mortgage brokers take the hassle out of you having to find your own mortgage deal. They also offer an end to end service, ensuring the whole process runs as smoothly as possible. If you do use a mortgage broker, rather than going straight to a bank, there may be a fee that you have to pay. At David Astburys, we can put you in touch with reliable and trustworthy brokers who can assist you.
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