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  • Writer's pictureRichard Jennings

How to Prepare for a Remortgage Application

Just as a sailor prepares for a storm by securing his vessel, you too must prepare when embarking on the journey of a remortgage application.

 

It's not something you can rush into without careful thought and preparation. You'll need to gather all the necessary documentation, understand your credit score, and possibly even improve it.

 

You might find it beneficial to work with a remortgage broker and calculate the potential costs of remortgaging. But how do you accomplish all that?

 

Stick around, and you'll discover the answers to these pressing questions and more.

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Gathering necessary documents for a remortgage application

 

Before you dive headfirst into a remortgage application, it's essential to gather all the necessary documents to streamline the process. You can't afford to be hasty or careless; it's your responsibility to ensure everything is in order.

 

Start by retrieving your proof of income. If you're employed, that's likely your last three months’ worth of payslips and a P60. Self-employed? You'll need your sa302 and tax year overviews from the past three years.

 

Next, gather your bank statements. These offer a snapshot of your financial health and spending habits, and lenders will scrutinise them. Make sure you've got at least the last three months' worth.

 

Don't forget about proof of identity and residence. A passport, driving licence will do for the former, while utility bills or a council tax statement can confirm the latter.

 

Lastly, prepare details of your current mortgage. Lenders want to know how much you owe, the property value, and the terms of your current deal.

 

Collecting these documents isn't just ticking boxes; it's proving to potential lenders that you're a safe bet. So, take your time, be thorough, and you'll increase your chances of a successful remortgage application.

 

Understanding your credit score and how it impacts your remortgage

 

While getting your documents in order is a crucial step, you also need to grasp the importance of your credit score and how it can affect your remortgage application. Your credit score is a reflection of your creditworthiness, that is, your ability to repay debt. It's determined by your credit history, which includes your past repayments, the amount of credit you're using, and whether you've had any defaults or bankruptcies.

 

Lenders will scrutinise your credit score when considering your remortgage application. A high credit score can make you more attractive to lenders, potentially securing you better interest rates. On the other hand, a low score might lead to higher rates or even application denial.

 

It's important to regularly check your credit score, ensuring there are no errors that might be dragging it down. If your score isn't quite up to scratch, consider taking steps to improve it before applying for a remortgage. This could involve paying off outstanding debts, closing unused credit accounts, or making sure you're on the electoral roll.


Improving your credit score before applying for a remortgage

 

Boosting your credit score can significantly increase your chances of a successful remortgage application. It's crucial that you take steps to improve your score prior to applying. Here's how you can get started.

 

First, obtain a copy of your credit report. Look for any inaccuracies. If you find errors, don't hesitate to dispute them with the credit bureau. An accurate report will better reflect your financial responsibility.

 

Second, pay down your debts. Your credit utilisation ratio - how much of your available credit you're using - impacts your score. Try to keep this ratio under 30%. If you're over this mark, focus on paying down your balance.

 

Third, make all payments on time. Even one late payment can harm your score. Consider setting up automatic payments to avoid missing due dates.

 

Lastly, don't apply for new credit. Each application can temporarily lower your score. If you must, do so sparingly.

 

Working with a remortgage broker

 

Once you've polished your credit score, it's time to consider enlisting the help of a remortgage broker. A remortgage broker can be your advocate, guiding you through the process, helping you find the best deals, and saving you from potential pitfalls.

 

Here's a simple, four-step guide to working with a remortgage broker:

 

1. Research: Start by doing your homework. Look for brokers with a solid reputation and positive customer reviews. You're entrusting them with a significant financial decision, so it's essential they're reliable and competent.

 

2. Initial Consultation: Arrange an initial meeting. This is your chance to ask questions, discuss your financial situation, and determine if they're the right fit for you.

 

3. Documentation: Gather all your necessary documents. This includes proof of income, bank statements, and property details. The more organised you're the smoother the process will be.

 

4. Communication: Maintain open lines of communication. Be proactive in discussing your needs and concerns. Remember, your broker works for you, not the lender.

 

Working with a remortgage broker doesn't have to be daunting. With the right advice and preparation, you can navigate the process with confidence and secure the best remortgage deal for you.

 

Calculating the costs of remortgaging

 

After securing a reliable remortgage broker, it's crucial to understand and calculate the costs associated with remortgaging. These costs can vary, and they often depend on the value of your property and the terms of the remortgage deal you're pursuing.

 

First, you'll have to consider the arrangement fee. This is the cost that a lender charges for setting up the remortgage. It can be a flat fee or a percentage of the loan amount. You should also factor in valuation fees, which cover the lender's cost to assess your property's value. In some cases, lenders might provide a free valuation.

 

Next, there's the legal fees. You'll need to hire a solicitor or licensed conveyancer to handle the legal aspects of the remortgage. Some lenders offer free legal work as part of their remortgage package, but it's essential to double-check this.

 

Lastly, consider any early repayment charges from your current mortgage. If you're remortgaging before your current mortgage term ends, there may be a penalty to pay.

 

Add up all these costs to get a complete picture of your remortgage expenses. This will help you gauge whether remortgaging is financially beneficial for you.

 

Mortgage Frequently Asked Questions

 

What Are the Potential Disadvantages of Remortgaging?

 

Remortgaging can have its downsides. You might face early repayment charges, higher overall costs due to extended terms, and impact on your credit score if you're rejected. It's important to weigh these before making a decision.

 

How Long Does a Remortgage Application Typically Take?

 

You're wondering about the time frame for a remortgage application. Typically, it'll take around 4-8 weeks. However, it can vary based on your lender's processing time and your own preparedness with required documentation.

 

Is It Possible to Remortgage With a Different Lender?

 

Absolutely, you can remortgage with a different lender. It's important to shop around, compare offers, and ensure you're getting the best deal. Don't feel obligated to stick with your current mortgage provider.

 

How Often Can I Remortgage My Property?

 

You can remortgage your property as often as you'd like, but it's not always beneficial. It's important to weigh the costs, such as early repayment charges and exit fees, against potential savings before making a decision.

 

Are There Any Specific Circumstances When Remortgaging May Not Be a Good Idea?

 

Yes, there are circumstances when remortgaging might not be beneficial. If you're in the final years of your mortgage or have a small amount left to pay, the fees could outweigh the potential savings.

 

Conclusion

 

In wrapping up, getting ready for a remortgage application isn't as daunting as it seems.

 

- Organise your documents, understand your credit score's influence, and work to improve it.

 

- Consider hiring a remortgage broker and always calculate your remortgage costs.

 

With these steps, you're well on your way to a successful remortgage application.

 

Remember, preparation is key and it's your diligence that'll make the process smoother and less stressful.

 

Good luck!

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