How To Compare Remortgage Deals In The UK?

 Quick Answer: Compare remortgage deals in the UK by considering the total remortgage cost. Look beyond the headline interest rates. Compare your existing lender’s product transfer offer to the wider market with a suitable independent mortgage broker.

 

It is a common assumption that remortgaging is all about comparing different rates and switching to the best option. While you can always compare remortgage rates, choosing the right deal involves much more.

A mortgage with a lower advertised interest rate can cost you more with product fees. A fee-free deal may carry a higher mortgage rate but ultimately be cheaper for you in the long run. A lender offering the lowest rates in the market may not accept your credit score, income, or profession.

This makes remortgaging a little more complex than simple rate comparison.

Let us explore how you should compare remortgage deals in the UK before making the switch.

 

Start with your existing mortgage

Before you look for a new deal, establish what you already have. Remortgage only if there is a need to do so (and if switching clearly offers benefits).

Considering your existing mortgage deal, focus on:

·  Outstanding mortgage balance

·  Current interest rate

·  End date of the deal

·  Early repayment charges

·  Standard variable rate

·  Remaining mortgage term

·  Current monthly repayment

·  Overpayment allowance (if any)

This gives you a clear idea about your existing mortgage deal and helps you plan ahead.

If you are currently on a fixed-rate period of your mortgage deal, remortgage well before this period ends. Ideally, it is better to start comparing new deals 6 months before you automatically switch to the standard variable rate (SVR). How long does a remortgage take can help to understand your remortgage time line.

It is also important to note that switching lenders is not always the better option. If your existing mortgage lender makes a product transfer offer, include it in your comparisons.

 

Compare rates and fees together

Avoid simply comparing interest rates while remortgaging. Calculate the total cost of different mortgage deals for better comparison.

The product fees a lender charges, your outstanding balance, your mortgage term, and a range of other factors influence your mortgage costs.

Along with the interest rate, include these in your remortgage comparisons:

·  Product fee

·  Monthly repayments

·  Total interest

·  Valuation costs

·  Legal costs

·  Broker fees (if applicable)

·  Early repayment charges

·  Administration expenses

Also, avoid comparing mortgages based on monthly payments alone. Switching to a mortgage with lower monthly payments can imply that you have simply extended your mortgage term. While it improves your cash flow, your total interest increases.

 

Compare the same mortgage term

Many homebuyers compare different mortgage terms before remortgaging.

Suppose your existing mortgage has 22 years left. You may come across a deal from a lender offering a 20-year mortgage. Another one may calculate repayments over 25 years.

In such situations, monthly payments are directly comparable.

The longer mortgage will always seem cheaper because you are spreading a loan over a longer time period. If you calculate the total interest, it is likely to be more.

Always start with the remaining term as you compare remortgage rates.

Now, an ideal remortgage deal is the one that reduces your overall interest while keeping your mortgage term intact. It is easy to get swayed by lower monthly repayments, but it is often an illusion that only increases your total mortgage cost.

 

Compare lenders based on your circumstances

Go a step beyond prices and rates while comparing remortgage deals.

Different lenders have different affordability models and underwriting criteria. Your circumstances may have changed since you got your existing mortgage.

A lender offering a competitive rate may not always be suitable for your circumstances.

Based on your situation, look for lenders ideal for circumstances like:

·  Being self-employed

·  Earning variable income

·  Applying with a different household income

·  Seeking additional borrowing

·  Dealing with a changed property value

·  Carrying additional debt

·  Planning debt consolidation

Making your requirements clear will eventually lead to better remortgage deal comparisons.

This is also where an experienced mortgage adviser can help you. Work with whole-of-market mortgage brokers or advisers in the UK. These independent professionals find you suitable remortgage deals from a wide range of lenders across the country.

 

Compare your existing lender to the wider market

Avoid leaving your existing lender out of the equation. They already know your circumstances and have approved your application once.

This is often a great advantage for product transfers. They require minimal documentation and involve quite lenient checks as compared to remortgaging with a new lender.

Compare your existing lender’s product transfer offer with the wider market. Such offers are likely to carry very little additional costs. If they have attractive offers for you, a product transfer might be the ideal solution.

 

The final word: the best remortgage deal is the one that works in full

There is no universal best remortgage deal.

It depends on your circumstances, existing mortgage, available mortgage products, and much more. Analyse factors like loan-to-value (LTV), product fees, your income, remaining term, outstanding balance, and product transfer offers along with interest rates.

The main objective of remortgaging shouldn’t be to look for the lowest numbers on comparison charts. It should be to find a deal that offers the strongest overall value based on your circumstances.