Oviso's handy guide to remortgaging

If there is a new deal that suits you better than the rest, we will make it our business to help you find it.

We have prepared this simple guide to help explain the process of remortgaging.

What is remortgaging?
Mortgages are long-term commitments, but you don’t have to stick with the same bank or building society for the whole term of the loan. Remortgaging is the process of switching the balance of your existing mortgage to a new mortgage product or lender without moving home, usually reducing the cost of your monthly repayments.

It is usually a good opportunity to review your personal and financial position and to consider whether your current mortgage deal or lender is the most suitable for your circumstances.

Why should I consider remortgaging?
Below are some of the most common reasons for remortgaging.

• Reduce monthly repayments
  Once your mortgage deal has come to an end, you will typically be placed on your lender’s standard variable rate (SVR), which could be higher than the previous mortgage deal you were on.
  Switching to a new provider or deal could help reduce monthly repayments as well as gain extra flexibility on your mortgage term.
• Borrow more money
  You may wish to borrow more money, possibly for home improvements, pay off other debts or to release equity from your home as the value of your home has increased substantially.
• Personal and financial needs
  You may want to ensure your mortgage meets your personal and financial needs or change to a different type of mortgage, for example, if you were on a variable-rate mortgage, you may want to look for a fixed-rate product that offers peace of mind so you know exactly how much your repayments are each month during the mortgage term.

Should I stay with my current mortgage provider?
You may think that sticking with the same mortgage lender could be rewarding, but in fact many mortgage providers have been penalising their customers with so-called loyalty penalties. The practice is so widespread that the Competition and Markets Authority (CMA) has been looking at the issue and has made recommendations to both the government and the Financial Conduct Authority (FCA).

Credit profile
Your credit profile will help mortgage lenders decide whether to lend to you as well as how much they will let you borrow. It’s also a way for lenders to establish whether you will be a risk to them or not. If you remortgage with your existing lender, providing you don’t borrow any more money, you’ll have already proved you can afford the monthly mortgage payments, meaning your existing lender may not insist on carrying out another credit check. Although be sure to double check this, as some lenders are more cautious than others. Take a look at how you can improve your credit rating.

Interest rates
Many mortgage lenders may try and entice you with attractive introductory offers, but your ongoing loyalty is rarely rewarded. Changing your mortgage provider could significantly cut your interest rate and reduce your monthly mortgage repayment.

Staying with the same lender
If you wish to stay with the same lender when your current deal comes to an end, we can complete a product transfer for you. This means you will be placed on a new product with your existing lender, which could be at a lower interest rate than your lender’s standard variable rate (SVR)

I want to remortgage, so what happens next?
Once you have made the decision to remortgage, below are some simple steps to help explain the process.

1. Speak to a mortgage advisor
   Should you decide to remortgage with Oviso, our friendly advisors will be able to work out whether remortgaging will save you money. We provide a comprehensive view of the best options available to you, comparing a wide range of deals from major banks and building societies – to try to find the mortgage that’s right for your circumstances. We look at the whole package, not just the rate, to ensure that we recommend the deal that best suits your individual circumstances.
2. Consider affordability
   Please remember that the cheapest deals don’t always mean the best deals, it’s worth considering which suits your circumstances better. For example, if you were unable to afford the repayments in the event of the mortgage interest rate rising, you may prefer to look for a fixed-rate product that offers a fixed payment.
3. Make the application
   Once you’ve made a final decision and you are happy with our advice, you’ll need to apply. Our advisers will help manage the application process from start to finish, making the whole process as seamless as possible.
   Common mortgage terms explained

Finally, below are some common mortgage terms you may come across to help you understand some of the remortgage jargon.

Bank of England Base Rate
A rate of interest that is set by the Bank of England. If the base rate rises and your mortgage has reverted to SVR then your mortgage payments are likely to increase.

Early repayment charges (ERCs)
Fees you may have to pay if you wish to leave your mortgage at a specific time, for example, during the period of the initial deal.

Fixed-rate mortgage
The initial period of the deal is usually between one and ten years where the mortgage interest rate remains the same. As a result, you can be certain that you will be paying the same amount each month for your mortgage.

Standard Variable Rate (SVR)
A mortgage deal will usually revert to this interest rate when the initial mortgage deal comes to an end. The SVR is decided by the lender and your payments may increase or decrease depending on interest rate movements.

Tie-in period
The period of time that you are tied into your mortgage deal. If you want to leave your mortgage deal during this time you will usually have to pay early repayment charges.

Tracker mortgage
A mortgage where the interest rate tracks the Bank of England base rate or London Interbank Offered Rate (LIBOR), depending on the lender

If you would like to speak to Oviso about remortgaging, then get in touch with one of our friendly advisors on 0333 321 0060.