Remortgaging Guide
'I know I’m probably paying more than I have to, but remortgaging is a pain isn’t it? All those APRs, SVRs and early repayment charges. That’s why I’ve been putting it off. If someone made the whole process hassle-free, I’d do it. Who wouldn’t want more money to play with every month?'
Guess what? Many mortgage lenders want you to think that switching is complicated. And they won’t be first in line to tell you you’re paying over the odds either. At Bradford & Bingley, we’re different. We do what’s best for you, not what’s best for us. We’ll work out how much you could save, find you a great deal, and make it as painless as possible.
Why switching makes sense
There’s one very good reason for switching your mortgage. Money. Think about it, if your boss asked if you’d like a pay rise, you wouldn’t need time to chew it over would you? Yet surprisingly, many people don’t review their mortgage, even though doing so could put extra money in their pocket.
The thing is, after a few years, your marvellous introductory rate will usually revert to a higher Standard Variable Rate (SVR). And you probably won’t even realise it. So think what you could do with say, an extra £100 every month. It could pay for a holiday each year. Or speed up those home improvements you’ve been thinking about. If you’re very sensible, you might use the extra cash to knock several years off your mortgage. If you’re not sensible at all, you could throw a huge ‘remortgage party’ for you and your friends. You never know, it could catch on.
Here’s some ideas on how you could spend the extra money.
• Pay off your credit or store cards.
• Start a savings account for your kids.
• Use it towards school fees.
• Use it for Christmas presents each year.
Your options explained
Don’t worry if you’re a little rusty. That’s why we’re here. There are many different types of mortgage, true. But only a few of them will be right for you. It’s our job to help you narrow it down and find one that suits you and your circumstances perfectly. Here’s a reminder of the main mortgage types.
- Variable. The standard mortgage type. So called because the rate can change.Your payments can increase or decrease.
- Fixed. You guessed it, the rate stays the same. For an agreed period (usually between 1-5 years) your payments stay the same. We also have deals where you can fix your mortgage payments for up to 10 years.
- Capped. A less popular choice that we don't currently offer. This is a variable rate mortgage that won’t rise above a certain level, for an agreed period of time. So you know what the maximum payments will be.
- Discounted. This is basically a variable rate mortgage that offers a lower rate for a promotional period. Making your initial payments much easier to manage.
- Tracker. As the name suggests, this type of mortgage tracks the movements of a benchmark rate, like the Bank of England’s base rate. Your rate will go up and down with it.
'Which one is the best for me?'
Until we’ve had a good chat, it’s impossible to say. Some people like the certainty of a fixed rate. Others like the possibility of their payments going down and so choose a variable rate. The truth is, we’re all different.
When we've help you choose which type of mortgage you want, you then decide how you want to pay it. There are two ways:
- Repayment. With a repayment mortgage, each month you pay a bit off the loan,as well as the monthly interest. At the end of the term you owe nothing.
- Interest only. With interest only your payments are lower, but only cover the interest on the loan. So at the same time, you pay into an investment fund, which is used to pay off the capital when the term ends.
Other ways to save
You’re getting the hang of this money-saving lark. Indeed, why stop at switching your mortgage? There are many other costs associated with owning a home, and we can help you review everything in one go. Which means you could end up saving a tidy sum – on your life and insurance cover too. We’ll also explain the costs of switching so you know exactly where you stand.
What else is switchable?
As well as your mortgage cover, you’ve got your life cover, your accident, sickness and unemployment cover, your income protection and your home insurance. All opportunities to save money. And don’t worry if you think things are starting to sound complicated. Because we offer all of the above products, we can co-ordinate everything and make the whole process simple.
There must be costs involved in all this?
Costs can include Mortgage arrangement and valuation fees, Product fees and solicitor’s fees, but we have a range of options to cover these costs for you.
