Remortgage deals: common mistakes to avoid

Getting a remortgage on your property can be a great way to save money and ensure that you are getting the best deal from your lender. It is not always completely straightforward, however. Take a look at this quick guide to avoiding remortgage deal pitfalls that can swallow up money.

Most people approach their current lender for a remortgage quote to start with. This makes sense, as you may be able to get a competitive remortgage deal without the hassle of moving your mortgage to another lender. It is usually a good idea, however, to get remortgage quotes from other lenders and compare them to any offered by your current lender, in order to make sure you are getting the best deal.

Be aware that when switching to another mortgage lender there may be an early redemption penalty to pay. These are financial penalties that have the potential to keep you tied into your current mortgage. If you are remortgaging to save money, however, the savings you could make from the deal may outweigh the cost of paying the penalty to release you from your current mortgage. It may be best to work out if remortgaging is worth the penalty before you start the process.

Remortgaging with new lenders: costs to consider

There may be other fees attached to your prospective new mortgage. These fees might take the form of arrangement fees, or assessment fees, where the lender must look into the value of the property in question. There may also be fees to cover any legal work involved in the remortgage process. Furthermore, if you use a mortgage broker, they may charge for their advice.

It makes good financial sense to take all of these potential additional costs into consideration when choosing a remortgage deal. The idea of a remortgage is to make sure that you get a saving in the long run, so when doing the figures on how much you could save, always remember that your final amount must reflect these costs. You can find “fees paid” remortgage deals, where there are no extra fees, and some brokers do not charge a fee to the borrower.

If you would only make a saving on your mortgage without paying these fees (generally, people with a mortgage of below £100,000) you may want to shop around before signing up to a remortgage deal.

The final common mistake is to pick a remortgage deal that seems amazingly cheap at first, but then later finding that the interest rate increases within a few years, and that you are tied into the mortgage with hefty redemption penalties. It is a good idea to look into the future when deciding on your remortgage deal.

Steven Clarke - Marketing Manager for www.remortgage-deals.org.uk. We offer a remortgage advice service which compares all cheap remortgages in the UK market to ensure you get the best remortgage deal.