Sarah Deacon, Area Manager for Wesleyan Financial Services (WFS) who specialises in providing financial advice to lawyers, explains the top three things to consider when you’re planning to re-mortgage your home.
Remortgaging can feel like a chore, but with a little bit of work you can unlock some big benefits.
Here’s the top three pieces of advice I give my customers when they’re looking to remortgage.
1. Understand the comparison rates
When shopping around for a mortgage deal, it's easy to be seduced by headline-grabbing interest rates. But with so many factors to consider it can be hard to compare like for like. Some deals may include application, legal and product fees. Others don't.
The one thing I always advise my customers to look out for is the Annual Percentage Rate of Charge (APRC). This is an overall cost for comparison. It’s quoted as a percentage of interest payable on the total amount of credit. It takes account of all fees that you might face.
When looking at the APRC, keep in mind that the calculation assumes you will stay with the same product and provider for the duration of your mortgage. In reality, most people look to switch once every few years.
2. Factor in the fees and costs
If you’re remortgaging before your current deal comes to an end, you may have to pay early repayment charges.
These fees are often tapered as a percentage of the remaining balance, for example, five per cent of the remaining balance if you have three years left on your remaining deal, but only one per cent if you only have one year left.
If you leave your existing deal before the agreed period, the lender may also ask you to repay any incentives originally provided to you, such as free valuation fees, legal fees, or cashback offers. Remember to check the T&Cs when considering your options.
It may still be beneficial to move to a new mortgage deal despite having fees to pay. For example, the savings you could make over the term of a fixed deal may be more than the fee due if you exit your existing deal early. The solution that’s right for you will depend on your individual circumstances.
3. Your personal circumstances matter
It’s important to think about how your future goals might impact your finances. For example, if you want to become self-employed or take a career break, you might want to consider a mortgage that gives you freedoms to take payment holidays.
As a lawyer you can also take advantage of your professional status and consider 'professional mortgages'. Lenders offering these mortgages will take your professional status into account and offer preferential rates. Qualification criteria typically include factors such as age and qualifications. WFS has access to a range of lenders who provide specialist mortgages for professionals and has arranged more than half a billion pounds of mortgages for professionals in the last two years alone.
For more information visit www.wesleyan.co.uk/mortgages/personalmortgages
This article does not constitute financial advice. Your mortgage is secured on your home, which may be repossessed if you do not keep up repayments on your mortgage.