If you live in the UK (United Kingdom), refinancing is called remortgaging. The process is longer than it is in the United States (US). But just like the US the remortgaging will help you lower your monthly mortgage payments is you qualify for a lower interest rate. The lower interest rates will result in a decrease in the monthly payments you make for your home. There are more reasons than lower interest to remortgage a home in the UK. You may want to shorten the length of time that you pay on your mortgage or you may want to change from an adjustable rate mortgage to one with a fixed rate. At any rate, the following steps outline the remortgaging process in the UK and you may find them moderately challenging. Let's begin with the first step.
Step 1: Read the documents you were given with your first mortgage. You will need to know the terms and conditions set forth in the terms of the mortgage that deal with changing your mortgage. You may have to pay a penalty if you change the terms prior to the passage of a set amount of time. If you have penalties for early payment they are called early repayment charges (ERC). Before you decide to remortgage you should be aware of the restrictions, if any, listed on your current mortgage contract.
Step 2: Ask your current mortgage provider to give you a redemption statement. A redemption statement is the payoff on your note. It is the amount that is due to the lender when you remortgage your note.
Step 3: Find out what the current market rates are for remortgaging. The lenders have a lot of different products to offer and you will need to choose the one that best fits your needs. There are tracker mortgages that track base rate. There are discounted rates, rates that have a cap, variable rates, and fixed rates for mortgage interest. You should make sure you look at the advantages and disadvantage of each of these products before deciding which you want to apply for.
Step 4: You will need to select the mortgage that offers you the best rates of interest and the best quote on fees that are associated with the refinance. You should always get quotes from more than one lender when in the market for any mortgage product. Interest rates and fees will be different depending on the lender's offer. If you have decided on a fixed rate or a capped rate you will need to know how long the rate will be in effect. After a specified period of time the rate will become the standard variable rate of the lender.
Step 5: You will have to make application for the refinance. Ask the lender that offers you the best quote to send you the application and let them know that you are ready to remortgage your property. The lender will ask for certain documentation to be included with your application. You will need to provide copies of all sources of income and all debt payments. You will need to provide proof of your identity. Get Form P60 from H M Revenue and Customs that details your income per year. You lender may have other information that he requires documentation for. Be sure to include everything with your application.
Step 6: Your lender will have to review the application and all the supporting documentation. This can involve some time so be patient. After the review process is completed the lender will send you paperwork that is called agreement in principle. Before your home qualifies as collateral for the loan the lender will have your home's current market value established by a surveyor. Although the lender calls the surveyor, you will pay for the service. If the surveyor information is acceptable to the lender you will receive an offer from the lender. You can either accept or deny the offer. If you accept then the lender will disburse the proceeds of the remortgage to the current mortgage holder. Your current mortgage holder will release you from the obligation of paying your current mortgage. You will be notified of the new payment schedule from your new lender who is handling your remortgage.
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