The most common time to remortgage is when a present mortgage arrangement expires, but there are several reasons why refinancing sooner may be more tempting.
You’ll be able to better grasp when remortgaging becomes a possibility, how soon is too soon, and what criteria you’ll need to fulfill to refinance early if you read this article.
When Can You Remortgage?
In principle, you can refinance at any moment after purchasing the house. However, most lenders would only consider remortgaging if you have owned your home and been recorded as the owner on the land registration for at least 6 months. Following the 2008 financial crisis, the Council of Mortgage Lenders implemented this 6-month mortgage restriction to prevent lenders from possibly losing money when houses were frequently sold within short periods of ownership.
Most lenders follow the norm, but others provide what are known as day-one remortgages, which enable you to refinance a house at any time after you’ve taken possession.
However, just because you can refinance does not imply it is the best option. Typically, there will be early payback penalties to pay. The amount may vary depending on your lender and mortgage, but costs are typically greatest in the first year of ownership.
You’ll also have to pay an arrangement cost, a valuation fee, legal expenses, and a mortgage departure fee. Before you begin the remortgaging process, tally all of them up and calculate how much you’d save in the long run with a remortgage.
Remember that the entire cost is what matters. For example, it’s pointless to take out a low-fee loan if the interest rate puts you out of money in the long run.
How To Remortgage Your House In Six Months?
If you need to refinance during the first six months of ownership, follow these steps:
Step 1: Ensure That Your Funds Are In Order
Just as when you applied for your original mortgage, a lender will want to know how much you’re making and spending, if you’ve got any debt, and what your credit history looks like. They will want three months’ worth of evidence of wages, bills and credit card statements, and information on your outgoings.
Before applying, you should also obtain your credit reports to contest any discrepancies and get any old information erased.
Step 2: Find A Specialized Broker
The remortgaging process can be difficult to manage, especially if you are doing it so soon after acquiring your home. Many of the brokers we work with are experts in remortgage and will be able to boost your chances of receiving a suitable remortgage offer.
The ideal broker will have strong working ties with lenders who provide six-month remortgages and will be able to match you with the best price.
Step 3: Select A Mortgage Type And A Lender
A broker can advise you on whether to stick with the same lender (which may mean less paperwork) or move to a new one. In less than 6 months, they’ll know which ones are willing to remortgage within 6 months. If you change, be sure you hire a solicitor to handle the paperwork.
You’ll also have to decide if you want a capital repayment or an interest-only mortgage, or whether you require a buy-to-let mortgage. This is something you would have considered the first time around, but if your circumstances have changed, perhaps the ideal mortgage for you has as well.
Step 4: Provide Proof
Lenders will want to know why you’re remortgaging and when you’re doing so. If it’s because you’ve worked hard to improve the property, they’ll want to see proof of your efforts. If it was acquired at an auction or was a repossessed property, they’ll need to know its current market worth. Lenders typically inspect the property to ensure that it is worth what you claim it is. The charge for this will be borne by you, the borrower.
Make an inquiry to be connected to an adviser for one-on-one assistance during this process. Regardless of how long you’ve owned your home, the brokers we deal with are specialists in the remortgage process.