Why do people transfer their mortgage?
A mortgage is a major financial burden, but hopefully a great investment too, as property usually increases in value over the years. Because most people repay their mortgage back over a long period (the average repayment term is 25 years), it is definitely good practice to keep reassessing and checking on the suitability of your mortgage as the property market alters, just as your personal circumstances will over this extended period of time.
Interest rates go up and down, your salary will alter (hopefully increasing), as will the value of your property. However, by the same token, financial situations can alter. the housing economy can weaken, you may be made redundant or be on sick leave for a few months, so it only makes sense to make sure you are not over paying your monthly mortgage repayments.
You may think that transferring your mortgage (also called a remortgage), will be stressful and decide it's not worth the hassle. However many mortgage transfer deals are generally hassle-free. Once you have chosen a suitably competitive lender to the one you currently have, they will converse with each other until the transfer is complete, leaving limited work for you to do with the change-over. It's well worth spending a few hours every couple of years to reassess your mortgage and switch lenders, as you could end up saving hundreds, if not thousands of pounds over several years. It's very common for people to switch their mortgage deals or lenders to get the latest special offer. Most mortgage offers will only last 2-5 years, so you need to make sure you prepare a few months before it is due to run out to make sure you get a change-over done in time.
How much can I save by transferring my mortgage?
Every deal will be different and it depends on what your property is worth and what your remaining mortgage balance is worth. It is very useful to use a Mortgage Repayment Calculator. This is a very easy way to find out how much your repayments will be at varying interest rates and different mortgage balance amounts. It will tell you in seconds how much you could save each month by transferring your mortgage.
What are the advantages of switching mortgage lenders?
- It's a competitive world and there are some great offers that could save money which means you will pay a lower interest rate on your mortgage balance. This will reduce your monthly repayments. It could also mean you end up paying your mortgage of in full much earlier, depending on what types of mortgage you have.
- A transfer mortgage deal could be one way for you to raise capital for certain purposes. Paying for home improvements, purchasing a car or holiday or financing large events such as a wedding. In fact a loan for any purpose.
- If your property has increased in value since you bought it, transferring your mortgage could release some of this money to allow you to enjoy some of the finer things in life, or help you out in times of need and provide you with a safety net for any unexpected emergencies.
How long will a transfer mortgage take?
Roughly about 4 weeks. Obviously in certain cases this time scale could be slightly quicker, and in others it could be up to 8 weeks.
There will be certain fees involved, check to make sure the savings you make won't be used up paying for the transfer fees. You can read more about the types of charges, such as Mortgage Exit Administration Fees.
The www.direct.gov.uk website has some good information too about mortgages in general and the considerations involved.