Monday, 24 January 2011

Q&A: Moving your mortgage

Can re-mortgaging really save money?

More often than not more people pay more for their mortgage than they should.  Interest rates charged by some lenders are often high to compensate for the cost of advertising attractive headline interest rates.  On top of this lenders are charging high arrangement fees and levying heavy early redemption penalties. For these reasons you need to check very carefully before committing to any change.

Is there any help around to assist me?

There are professionals around that specialise in this area.  Some work for the lender and can only advise on the lender’s range of products. There are others who are totally independent and who are free to give advice on products from the whole of the market. Be careful however as some charge a fee for their advice whilst others charge both a fee and take a commission from the lender with which the mortgage is placed. It is best to shop around and to always check the rates quoted by the advisor.

At MJP we can put you in touch with an Independent Financial Advisor and if you decide to place instructions with the Advisor and we are paid a referral fee we will be happy to share this with you.

Can I do it myself?

Yes but with care!

Here is a check list:

  • Check the terms and conditions of your existing mortgage to see if there is penalty for switching mortgage. If there is, you must decide if it is worth switching to a different rate or stay put until the penalties have expired.
  • Explore with your current lender if they can offer a more favourable deal
  • Shop around in any event and look towards a different lender to get a better deal.

Could I re-mortgage instead?


As well as reducing your monthly payments, you can also use re-mortgaging as a way of releasing some equity that has built-up in your property's value.

Borrowing through your mortgage may be much cheaper than taking out a personal loan, but the debt is secured meaning that if you cannot keep up with additional payments, you could risk losing your home.

Which deal is best for me?

There is a wide choice of  products and here are a few of the more popular ones:

  • Fixed-rate mortgages are ideal for people who want certainty and must be able to regulate how much they will be spending each month.
  • Discounted loans offer a reduction off the standard variable rate for a set period. If rates fall further, the rate that you will pay will also go down. However, when rates rise, so will your mortgage payments.
  • A capped-rate loan will set a limit on the rate you will pay. If rates rise, your payments will not go above that level. However, if rates fall below the cap so will your repayments.
  • Flexible mortgages allow you to overpay and underpay when you choose and without penalty. This is ideal for people who have fluctuating incomes or who want to clear their mortgage early.

What do I need to look out for?

Avoid deals with extended redemption penalties.

Extended redemption penalties are often hidden in the small print of a mortgage contract and are sometimes called early repayment penalties or charges.

Before you agree to a mortgage you should be presented with a key facts document. This should outline all the mortgage charges and small print in plain English.

Always read the key facts document thoroughly and if you are unsure of any clauses take advice. At MJP we can help you and provide advice on any queries you may have.

How do I apply?

Obtain a 'redemption statement' from your existing lender.
This will tell you how much you owe.

You must then complete an application form from your new lender.

Your new lender will value your home. This will cost between £200 and £300.

Most lenders will also charge an arrangement fee.

Some lenders offer dedicated re-mortgaging services with free legal work and valuations but others will charge for this service. At MJP we can offer a legal service for re-mortgaging at prices starting at £250 Plus VAT

How long does it take?

It should take about a month to complete the process, if not sooner

You will get a mortgage offer of advance, if the lender's surveyor is satisfied with the value and condition of your home.

Your new lender will liaise with your existing company.

Once you have received a completion statement from your solicitor or new lender, the process has finished.

For further details on how MJP solicitors can help you please call 01603877004 and ask for David Pett or email

Morgan Jones and Pett Conveyancing Service - 01603877004

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