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Remortgage buyers

Many homeowners will have existing mortgage deals for a fixed period of time such as two, three or five years. When the deal ends your mortgage will revert to the standard variable rate (SVR) which may be a much higher rate increasing the cost of your repayment.

A mortgage repayment will tend to be your largest monthly outgoing, so it is important to starting looking to remortgage before your existing deal ends. You could first ask your current lender to see what they can offer you.

With independent advice from London City Mortgages we can help you find a lower rate than the SVR including fixed rate and tracker rate mortgages and with a term that meets your needs. We can help you find the best mortgage deal and make the online remortgage process easy for you.

Why would you remortgage?

Your property is likely to be your largest asset and there are many benefits of selecting a new mortgage to meet your current needs.

If you have been a homeowner for short time such as five years or less you may wish to reduce the monthly repayment costs by remortgaging or move to a fixed rate mortgage to have certainty of the monthly payments.

If you have owned your property for ten or twenty years you may like the idea of raising equity by remortgaging. You could use this to improve your home such as adding a new kitchen, bathroom or extension which could also increase the value of your home. Here are some of the benefits of remortgaging:
Benefits of remortgaging your home
Reduce your monthly repayment costs
Change to a fixed rate mortgage so your monthly payments are certain
Select a shorter or longer term for your mortgage
Raise capital for home improvements
Capital raising for a deposit on a buy-to-let property
Select a mortgage that allows unlimited overpayments
If your circumstances have changed you can remortgage to allow greater flexibility such as selecting a shorter or longer term, making greater overpayments without penalty.

Finding the right remortgage

You may find since you bought your property the price has increased and this will improve your loan to value (LTV). As the LTV reduces and the amount of equity increases lenders are willing to offer you better interest rate deals.

As an example, if you bought your home for £300,000 with a deposit of £15,000 or 5% your loan to value would be 95% and let’s say your mortgage rate at the time was 4.49%.

If your property value increases from £300,000 to £360,000 your equity in the property will be £75,000 or 20% reducing your LTV to only 80% and you are seen as a lower risk borrower by the lenders.

The interest rate you pay will decrease considerably with the lower LTV and by remortgaging you could be offered a rate 2.5% lower than your existing rate saving you a significant amount in interest over the term of your next mortgage.

There are a number of mortgage types to consider are as follows:
Type of mortgages you can consider
Standard variable mortgage Discounted mortgage
Tracker mortgage Fixed rate mortgage
Capped mortgage Offset mortgage
If you are on an interest only mortgage you may find you will have to change to a repayment mortgage as lenders have changed their criteria. Many lenders would require you to have a high level of earnings a high level of equity in your property before offering an interest only mortgage.

Reducing your mortgage costs

You can reduce the costs with some planning by avoiding lender charges and reducing the total interest you pay over the lifetime of the mortgage.

Most fixed, discount or tracker mortgages would require you to pay an early repayment charge if you move to another mortgage lender before the end of your special deal and this charge could be as much as 3% of the mortgage.

If you are still on a special deal you should check the terms & conditions for your lender to see if a charge applies. In some cases, such as a tracker mortgage, you may be free to move without a charge.

Ideally you would have come to the end of any introductory offer and have no repayment charge to pay for moving to a new lender. It could be worth looking at the whole mortgage market again to find the best deal for you.

There are a number of cost advantages of remortgaging such as staying away from the standard variable rate (SVR) which could be high such as 4% to 5% and a cost worth avoiding.

You may also want to change the type of mortgage if you started with a discounted variable mortgage two or three years ago. With interest rates at an all time low level there is always the risk interest rates may increase in the future and you can avoid the cost of rising mortgage repayments with a fixed rate mortgage.

You also need to compare fees and interest. The new mortgage deal may have an arrangement fee of £500 to £1,500 so you need to compare this with a deal that has no fee. The application fee can be added to the loan so you need to take this into account when comparing the costs of remortgaging.

You will find if there is no fee charged the interest rate will be higher, so over two or three years you need to work out if paying more interest cost more or less than the higher fee option.

A shorter term deal such as two or three years will have a lower interest rate than longer term deals such as five or ten years. You need to take into account the interest rate for the mortgage and compare the total costs over the introductory offer period.

Making overpayments

Your mortgage will have a term of 25 to 40 years and over this time period the amount of interest you will pay and really add up. If you can make overpayments in addition to your mortgage repayments you will significantly reduce the interest cost of your mortgage.

For example, if you buy a property for £210,526 with a £10,526 deposit your mortgage will be £200,000. The most popular term is 25 years and if you pay an average interest rate of 2.95% the cost is £943.23 per month.

Over 25 years you would pay £82,968 in interest and if you made an overpayment of £200 per month this would reduce to £61,786 or a saving of £21,182. Furthermore you would fully repay the mortgage after 19 years and 1 month.

Most mortgages allow you to overpay the outstanding value of your mortgage by up to 10% each year without penalty. Some may allow you to overpay an unlimited amount such as some tracker deals without penalty.

Applying for your remortgage

The application process for a remortgage for a house move is very similar to any other application. If you are applying through London City Mortgages the application can be completed for any mortgage lender online 24/7 on a pc, tablet or phone. You can upload any other documentation direct to your application such as payslips, bank statements, proof if identity and address.

Unlike buying for the first time, remortgage buyers have an advantage as you are likely to have more equity in the property and a history or regularly paying your mortgage which reduces the risk for any new lender.

Our advisers can check the maximum amount you can borrow and search the whole market for the lender offering best mortgage deal for your circumstances.

Once the lender has received your application they will conduct a credit and affordability check before making an offer for the mortgage. Remember also that the lender would also need a valuation for the new property and often this is paid by the lender.

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Re-mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.55% Fixed Rate
70% Loan to Value
£1,510 Lenders Fee
Until 31/05/2021
Reverts to 4.74%
1.59% Tracker Rate
70% Loan to Value
£1,034 Lenders Fee
Until 2-Years Time
Reverts to 4.24%
1.39% Tracker Rate
70% Loan to Value
£1,199 Lenders Fee
Until 30/06/2021
Reverts to 4.24%
1.49% Fixed Rate
70% Loan to Value
£1,199 Lenders Fee
Until 30/06/2021
Reverts to 4.19%

How it works

Free mortgage quote

Ask for a free quote and our mortgage adviser can do the work for you to check the whole market and find the best mortgage for you

Start your application

Use secure online payments to pay our mortgage advice fee after any money off vouchers, start your application 24/7 using your smartphone, tablet or pc

Your mortgage online

You are in control whether on the move or at home, use our traffic light modular online form to easily complete and upload your documents

We're here to work for you

Your mortgage manager gives you advice, will help you with the online form and liaise with the lender to secure your mortgage offer

Get started now with a
free mortgage quote

As mortgage advisers we can do the work for you to find the best mortgages.
Access your quotes via your dashboard to start your mortgage application online 24/7
using a tablet or smartphone if you are on the move or from the comfort of your home.

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The latest mortgage news


12 Sep 2017

Remortgage buyer activity soars as mortgage rates reach all time low

The number of remortgage buyers surge 12% taking advantage of record low mortgage rates to reduce the cost of repayments.

25 May 2017

Home buyers in London down 18% compared to a year ago

For the second quarter in a row the number of home buyers are lower in London due to restricted supply and affordability.

09 May 2017

Mortgage rates reach new lows as availability to borrowers rises

The mortgage market has seen a rise in the number of products on offer giving homeowners more choice as rates reach new lows.

11 Apr 2017

Strong home buying activity increases 6% by value in the last month

Home buyers start the year strongly with mortgage lending of £8.9 billion in February which is an increase of 7% over the month.

13 Mar 2017

Homeowners earn more from property than jobs in a third of UK areas

House prices outpace homeowner earnings in 119 local areas over past two years with majority located in the southern England.

02 Mar 2017

Home ownership in England at 30 year low, says government report

English Housing Survey shows home ownership is the lowest level since 1985 with the private rental sector doubling since 2002.

22 Feb 2017

London home buyer loans down 5% in the fourth quarter 2016

Home buyer borrowing in London reduces 5% or £310 million in the final quarter of 2016 continuing the downward trend for the capital.

13 Jan 2017

10-year fixed rate mortgage costs rise, would you lock in for the long term

After years of falling rates the 10-year fixed rate mortgage costs are beginning to rise according to research from Moneyfacts.

17 Nov 2016

Mortgage costs reach historic low point for September

The cost of a mortgage as a proportion of household income has reached an historic low although there is no increase in house purchase activity.

18 Oct 2016

UK house prices are stable as homes sales fall by third over the year

House prices in the UK are up over the year and remain stable as the number of sales completed have dropped by up to a third.

12 Oct 2016

Mortgage lenders penalise one in six families with childcare costs

One in six families have been offered a smaller mortgage from a lender due to their childcare costs adding to parents stress and anxiety.

07 Oct 2016

Annual house price growth slows to lowest level for three years

The growth rate for homes has slowed to 5.8% a year the slowest rate since August 2013 according to the Halifax house price index.

13 Sep 2016

House price growth in London boroughs remain strong but slowing, says ONS

Many London boroughs continue to see house price growth in double figures although the average rate is slowing.

14 Aug 2016

How will the Bank of England interest rate cut will affect your mortgage

The Bank of England has reduced interest rates from 0.5% to 0.25% but will your mortgage benefit from the decrease?

07 Jul 2016

Coventry Building Society launches 10-year mortgage as rates plunge

The lowest ever ten year fixed rate mortgage deal at 2.39% is launched by the Coventry Building Society after EU referendum.

27 Jun 2016

House prices and mortgage rates to fall in wake of Brexit

Uncertainty created with Brexit could see house prices fall by 5% and decreasing swap rates may produce better mortgage deals.

15 Jun 2016

Homeowner mortgage lending values falls 40% for the month to April, says CML

Homeowners borrowed £8.2 billion for the month to April 2016 down £5.4 billion or 40% after a significant rise in mortgage activity last month.

25 May 2016

Homeowners could switch mortgage deals in seven days under new plans

Proposals in the government's Digital Economy Bill intend to make switching a mortgage deal for homeowners possible within a week.

15 Apr 2016

Brexit could see mortgage rates rise and UK property prices fall

George Osborne has warned mortgage rates would increase if the UK leaves the European Union increasing the cost to homeowners.

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IMPORTANT

Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.

WARNING

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