7 min read

Avoid these 4 common remortgaging mistakes with tips from our expert

16 March 2018

We've teamed up with Kala Sreedharan from online mortgage broker Habito to help you save money on your current mortgage. Let her insider knowledge guide you through the most common pitfalls when it comes to remortgaging

So you've had your mortgage for a few years and you've pretty much got this whole thing down. But then along comes the idea of remortgaging. It was complicated enough the first time - do you really have to think about it all again?

But the reality is remortgaging could save you a lot of money if you do it right. In fact, according to a recent study, remortgaging could save home-owning Brits as much as £2.78 billion. So you probably can't afford to ignore it.

But don't worry it doesn't have to be an uphill battle. We've teamed up with an expert to help you avoid the most common mistakes people tend to make when remortgaging.

Meet Kala VP of Operations at online mortgage broker Habito. She started off as a Trainee Mortgage Adviser and now she heads up Habito's whole team of mortgage experts. Her front-line experience means she really does have that insider knowledge to help guide you through the trickiest bits of the remortgaging process.

Kala has shared her insider knowledge especially with ClearScore to help you overcome the four most common obstacles and mistakes people tend to make when remortgaging.

Over to you Kala...

It may seem obvious but the most common mistake you're likely to make is not even thinking about remortgaging in the first place

When you first go through the process of getting a mortgage you're constantly being told how big a financial commitment it is. I think this kind of message really puts people off even considering their remortgaging options.

But the thing is, you don't have to be tied to the exact same mortgage deal for 30 years. In fact, for most people remortgaging could help you save money and it helps make sure that your mortgage suits your changing circumstances.

When the initial fixed rate on your mortgage comes to end, you tend to switch on to what is known as the lender's Standard Variable Rate (SVR). This is often much higher than the initial interest rate, which means you tend to end up paying a lot more.

Remortgaging to a new, better deal means you'll pay less in interest and you might even get a deal with lower fees. It could also help you get more flexibility in your mortgage. For example, a chance to make bigger overpayments than you could with your original deal.

Obviously, there are a number of things to think about to decide if remortgaging is right for you. But I think that everyone should be thinking about remortgaging at least once over the course of their mortgage.

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The second biggest mistake is simply relying on your current lender for your new deal

There's definitely a misconception out there that you are tied to the same lender for the entirety of the mortgage.

But you don't have to be. Remortgaging gives you the chance to switch it up entirely. This could help you get access to better deals.

Speaking to a broker will give you all the options available in the market. Mortgage brokers either have access to thousands of lenders and they can find you deals, or they are tied to specific lenders and they may be able to get you an exclusive deal.

If you wait too late to get in touch with a broker you could be missing out on those savings

If you decide you want to remortgage, it's better to get the ball rolling sooner rather than later. When people chat with our team of experts about remortgaging, we often find that they're already at the end of their fixed-rate deal. But leaving it this late means you could end up overpaying for a good few months.

The legal work for remortgaging can be a long, drawn-out process. Ideally, you should aim to get in touch with a broker about 6 months before your fixed rate expires. This gives you enough time to get it sorted and means you won't end up accumulating lots more interest when there's no need.

The final mistake is simply choosing the same product again and again when remortgaging

In my experience, I often see people opting for the same type of product as they went for initially when they're looking for a new deal (usually this is another 2 year fixed rate product).

There's nothing actually wrong with this but you're probably not making the most of what's out there. It's important to take stock of the situation you're in now, rather than assuming that the product that was suitable back in the day, will also be suitable when remortgaging.

My best tip here would be to take the time to get your head around all the options. It could be that for your current circumstances you'd actually rather go for more flexibilty and sacrifice a slightly cheaper rate. Or maybe there are things going on in the wider economy (such as rising interest rates) that mean you'd rather lock into a longer term fixed period than before. You may even want to remortgage for a higher amount so you can get access to some of the equity you own in the property. Chatting with a mortgage broker can really help you to understand all your options.

If there's one thing I've learnt from my time in the mortgage industry it's that things are changing all the time in our lives, and so what was the right option before may not be the right option the second or third time around.

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