Do you need a remortgage broker?

Remortgaging, simply put, is the process of switching from one mortgage deal to another on a property you already own, whether with the same lender or a different one. The goal is to secure a better interest rate, save money, or fund home improvements.

Now, you might be pondering, "Do I need a mortgage adviser to remortgage?" This article will explore why working with one can be an advantage in your remortgaging plans.

Why remortgage?

To realise the importance of a mortgage broker, it's necessary to understand why you need to remortgage in the first place. 

Remortgaging can significantly impact your financial well-being. By making the switch to a more favourable interest rate, you can reduce your monthly mortgage repayments, allowing you to ease the strain on your monthly budget. Some lenders may also permit overpayments to speed up your payoff.

Furthermore, remortgaging opens the door to increased borrowing potential, granting you access to extra cash for other plans. Whether you're looking to fund home improvements, invest in another property, or simply have a financial safety net, it can provide you with financial flexibility.

Another advantage is releasing your property's equity that can be used as cash for various purposes such as financing home renovations, paying for education, or even taking a vacation. It's a way to leverage the value of your home to potentially generate more wealth.

However, many borrowers are unable to remortgage due to a number of reasons.

For example, they can be denied due to stringent affordability checks introduced after the property purchase, leaving homeowners trapped with higher interest mortgages or their lender's standard variable rates. The extended time it now requires, due to stricter mortgage rules, can discourage many from considering remortgaging as a viable option. Additionally, eligibility criteria must still be met, adding complexity to the process.

Low credit scores also pose another barrier, leading to less favourable terms and higher interest charges. Building a positive credit history takes time, but steps such as checking your credit score, addressing errors, and managing debts can help improve it. 

In addition, a high loan-to-value (LTV) ratio, often a result of property value fluctuations, can reduce the likelihood of successful remortgaging. Negative equity, where the mortgage balance exceeds the property value, presents further obstacles. Finally, changes in income, whether due to job transitions or personal circumstances, can also impact affordability assessments that may result in mortgage arrears.

The consequences can be drastic. Households that fail to refinance their mortgage when interest rates decline lose out on substantial savings.

Should I consult directly with a lender or work with a remortgage broker?

Working directly with a mortgage lender for your remortgage can offer the convenience of having your information already on their file, which can speed up the application process. Some lenders may also offer loyalty discounts or incentives to existing customers who choose to remortgage with them. These incentives may include lower fees, reduced interest rates, or waived product fees.

But while there are advantages to working directly with a lender, keep in mind that they are limited to their own range of mortgage products. This means you may miss out on potentially better deals available in the broader mortgage market. Additionally, their advice may be partial towards promoting their own products.

On the other hand, when you choose to work with a remortgage adviser, you gain access to their extensive knowledge of the mortgage market. They thoroughly assess your current financial situation, risk tolerance, and specific needs to provide tailored recommendations. Unlike lenders, brokers are not limited to their own products and can search the entire mortgage market to find the most suitable deal for you. 

Remortgaging brokers also lower your risk of loan rejection because they better understand various lenders' requirements and preferences. By carefully assessing your financial profile, they can identify lenders that are more likely to approve your application. 

Thanks to their extensive networks and relationships with lenders. This allows them to access deals and terms that may not be advertised to the average borrower. This insider knowledge can potentially lead to better terms and cost savings over the life of your mortgage.

Furthermore, mortgage advisers streamline the application process, handling paperwork, addressing lender queries, and ensuring the remortgage process progresses smoothly. Their expertise and guidance not only save you time but also increase your chances of securing a more favourable remortgage deal. 

While there may be costs associated with hiring a broker, the value they provide in terms of finding the best options and managing the application process often outweighs these expenses, making them a valuable asset in your remortgaging journey.

Can I get the same deals through my lender and my remortgage adviser?

Many lenders make their mortgage products available both directly to consumers and through mortgage advisers, ensuring that borrowers can access similar offerings, regardless of their chosen path. This allows them to tap into the expertise of these professionals, potentially reaching a broader customer base. Simultaneously, offering products directly to consumers enables lenders to maintain a direct connection with borrowers who prefer a self-guided approach.

However, not all lenders offer such flexibility. Some exclusively distribute their products through mortgage intermediaries, while a select few opt to sell directly to consumers, bypassing intermediaries altogether. 

Although many mortgages are exclusively accessible through brokers, some can only be obtained directly from lenders, without broker involvement.  You should also consider inquiring about direct-only mortgages when engaging with a mortgage adviser. 

What's the best way to reach out to a remortgage adviser? 

The most common way of contacting a remortgage adviser is through an online search. Many advisers also have websites with contact information or inquiry forms to speed up your inquiry process. Others even have online questionnaires as a convenient way for borrowers to provide essential information about their financial situation and mortgage needs. 

This information typically includes details like income, credit score, desired loan amount, and homeownership goals. By gathering this data upfront, brokers can better understand the borrower's circumstances before the initial consultation.

Remember that some advisers and brokers limit their recommendations to mortgages available from so-called panel lenders. On the other hand, there are mortgage advisers affiliated with banks or building societies that promote only products from their respective institutions. If you prefer an adviser who can evaluate more available mortgage options, a whole-of-market broker is a good option. They can recommend cost-effective deals that suit your financial situation.

In addition, traditional mortgage brokers typically offer in-person or phone-based services, providing personalised guidance. Such a direct interaction allows for a deeper understanding of your financial situation, homeownership goals, and risk tolerance. With this, traditional brokers can provide tailored recommendations, ensuring that the mortgage products they suggest align closely with your unique needs.

What should I ask my remortgage broker?

1. Do you identify as a whole-of-market broker or direct-only-from-lenders?

This can help you assess the range of products offered by your broker. A whole-of-market broker can offer a broader range of options from various lenders, potentially increasing your chances of finding the most suitable and cost-effective remortgage deal. On the other hand, a direct-only broker may have limitations in terms of product diversity, which could impact the competitiveness of the deals they can recommend.

2. What are the services included in your offer?

This helps clarify the extent of services provided by the broker. Knowing what is included in their offer ensures that you have a clear understanding of the support and assistance you can expect throughout the remortgaging process. It also helps manage expectations and ensures that you and your broker are aligned in terms of the services they will deliver.

3. Why are you recommending a particular remortgage deal?

This allows you to evaluate whether the recommended deal aligns with your financial goals and preferences. In addition, it helps build trust and transparency in your working relationship with the broker, as you can assess the logic behind their advice.

4. What are the mortgages available that can fit my financial standing?

This question helps you explore the full range of mortgage options that suit your financial situation. By knowing what is available, you can make a more informed decision regarding the remortgage product that best aligns with your specific needs and affordability. It also ensures that you do not overlook potentially better deals that might be suitable for your financial standing.

5. What are your fees and additional charges?

Transparency regarding fees is essential to avoid surprises and ensure that you are comfortable with the cost structure. Knowing the broker's fees and any additional charges upfront allows you to factor these costs into your budget and assess whether the services provided are commensurate with the fees charged.

6. What is your availability? Do you answer calls during weekends and in the evenings?

Understanding your broker's availability is essential for communication and timely assistance. This helps establish expectations regarding when and how you can reach out for support. It ensures that you can access assistance when needed, especially if you have inquiries or require guidance outside of regular business hours.

Frequently Asked Questions (FAQs)

What information should I provide to my remortgage broker?

To initiate the remortgage process, the mortgage broker will require essential information, including your complete personal details (such as name, address, and date of birth). They will also need valid identification, typically in the form of a passport or driver's licence, along with your most recent three months' payslips and bank statements. Additionally, a credit report will be essential for assessing your financial standing.

Can I remortgage early?

Commencing the remortgage process approximately six months before the conclusion of your current mortgage rate is advisable to prevent a hurried decision. On average, a remortgage typically spans a duration of around three months, so it's prudent not to delay beyond this period before your existing mortgage deal expires.

What does a remortgage broker offer that a direct lender cannot?

Their value lies in offering unbiased advice and expert guidance throughout the mortgage loan process. Unlike banks, brokers are not tied to a single lender, enabling them to thoroughly survey the market and identify the most suitable products tailored to your unique requirements. Furthermore, these advisers often possess the negotiation skills to secure deals with lending institutions that can be significantly more favourable than what you might obtain independently. 

What are the costs when hiring a remortgage broker?

Remortgaging can entail several costs and fees. There may be a fee for mortgage advice as well. Depending upon your circumstances, it can be up to 1.5%, but a fee of 0.3% of the amount borrowed is typical. 

The convenience that a skilled remortgage broker can provide by exploring the entire market to secure a remortgage deal is worth the price. Their expertise can potentially help you minimise the financial burden associated with remortgaging, ensuring that you obtain the most cost-effective solution tailored to your needs.

How do I know that a remortgage broker is independent?

To ensure that your broker has the utmost freedom to identify the most advantageous deal for you, it's advisable to inquire if they are "whole of the market." This means that the broker can consider and recommend mortgage products from the entire spectrum of lenders, providing you with a more extensive selection of choices and increasing the likelihood of finding the best-suited mortgage for your specific needs and circumstances.

Should I insist on a lower interest rate?

No. Remember that the interest rate isn’t the only thing that affects the overall costs of a mortgage. Think about the level of flexibility you might need concerning switching deals in the future. Remortgaging is a great way to save money, but there can be fees involved and the cost of these can outweigh the benefit of a low rate.

Can a remortgage broker offer advice on reducing or extending the term of my mortgage?

Yes. They can help you with finding the flexibility to adjust the term of your mortgage, allowing you to suit your financial goals. You can opt to reduce monthly repayments by extending the term, making it more manageable, or choose a shorter term to pay off your mortgage sooner. Whatever your specific financial needs entail, remortgaging provides an effective avenue to align your mortgage with your objectives and achieve the desired outcomes.

My home's current value has put me in a different LTV range. How can I get a lower interest rate?

You can reduce your monthly mortgage payments if you have a higher percentage of equity in your home. As such, consulting a remortgaging broker can help you assess your financial situation better and where to find the best deal for you.

Contact a remortgage broker today

The Mortgage Hut team provides expertise to help you assess your finances and offers tailored advice to increase your chances of remortgage approval. With access to diverse mortgage products, our advisers can guide you towards the best choices for your financial profile.