Everybody's Doing It!!! (Remortgaging)

Member Name: jatkinson100

Product:	Remortgaging
Date:	10/01/02 (144 review reads)
Rating:

Advantages: Could save you money

Disadvantages: May pay a penalty, Hassle (but less than you think)

Yes, everybody is remortgaging, or so it seems to me. I work for a Mortgage lender, in their Redemptions Department, and we are really busy because everybody can see that better deals are to be had elsewhere. Statistics show that you are more likely to get divorced than change banks, but this is certainly not the case with changing mortgage lender. You don't have to change, though!

Most mortgage lenders are aware that people, once they are out of their discounted period, and penalties, will move, and so have specific departments to keep you with them. It may proove cheaper if you contact your existing lender and ask them about their own deals than going through a broker or contacting another lender. The amount of work involved in transferring or redeeming a loan is great, and you can be sure that the lenders will not bear the cost - it will be you. If you stay with your own company, the expense is far less for all concerned. They will not have to pay for Mortgage Questionaires, removal / creation of a charge over your property (a charge is note with the Land Registry that says that the Lender practically owns your house, and has first dibbs on any money from a forced sale or insurance policy), deal with the Title deeds of your house, etc. The lender also won't have to pay any commission to a third party for finding the loan for you.

You don't even have to pay for a brokering service - just go to a few brokers and banks / building societies and see what they are offering. Then, once you have found a few good deals, call up your own company and ask them what discount rates they can come up with - remember, they want your business!!! Even if they can't beat the deals offered by others, all it has cost you is a couple of hours and a phone call or two.

Be careful what deals you go for. I have found that capped rates (interest rate changes with base rate, but will not go above a set level) or discounted rates (the borr
ower can choose to have, for instance, 2.5% reduction for two years on the lender's base rate) are best. Fixed rates (the interest rate is set a certain level and does not fluctuate), unless terribley low, can be a poor choice. We have many customers who are redeeming because they gambled (that's what a fixed rate mortgage is) on the interest rates going up. With the interest rates as they are now, I have found people who got a great fixed rate deal at the time, but are now stuck paying 9% when the base rates are around 5 or 6%.

Avoid long penalty terms. Fewer and fewer lenders are using long tie-in periods, but don't get caught. Your penalty period should, ideally, last only as long as your deal, but many can last for 4 or 5 years after you have stopped seeing the benefits.

The people who should be looking at remortgaging are those who are on their lender's base rate - if you are on base rate, you are paying for the people on deals, and really should look at getting a new deal yourself. If you are still in a penalty period, you must remember that it may work out more expensive to change to a cheaper deal (if that makes sense). Penalties can be massive, a wipe of all or most of the benefits of moving lender. If you do ask your existing lender for a new deal, especially if you don't have that long left in your penalty period, they may choose to waive it if you if you stay with them.

Although I have said a lot about sticking with your existing lender, don't be afraid t move if a better deal is to be had elsewhere. The experience is pretty painless. Your new lender should take care of most of the legal side, most providing a solicitor. However, thee solicitors work for the lender, not for you, so don't let them take over! Check what they are doing, and all of the details about money for yourself. When they send through details of the account, it will include everything from your old loan, and what they
have done - do not be afraid to question charges. Request a redemption figure from your old lender, so you know how much you are paying off, and then find out where the difference comes from. Find out if yu really shuld have made that last Direct Debit payment - the last payment taken into account will be on the redemption figure.

Your new lender will make sure that you are insured, and that they are first named beneficiary, but they might not make sure that your old insurance is cancelled. If your new loan comes with insurance, or you sign up for insurance with it, make sure that your old insurance is cancelled and that you get a rebate. If you have remortgaged and get a renewal notice months later, find out if you paid for your insurance to continue. If you did, send in your new insurance schedule to your old lender and they should send you a rebate for all of the time that you had two policies.

Solicitors will charge you for TTing money (Telegraphically Transfering from one account to another). £15 - £20 is reasonable, any more and ask why! Some will charge a TT fee and then send a cheque, so watch them.

Do not be afraid to call your solicitor to ask how things are progressing. Remember, they work for you, not the ther way around.

Find out if your old lender works on a daily or monthly interest rate. If it is monthly (as with us, you pay interest to the last day of the month in which you redeem), tell your new lender you want to complete at the end of the month - that way you will not be paying interest on two loans for the same period.

If your redemption figure looks wrong, question it with your old lender. Ask how they worked it out, and get a redemption figure breakdown. If they don't listen - SHOUT! Now, if you put the word "complaint" in a letter to a bank or building society, or tell them that you are unhappy, they must respond to you within 24 hours of their receiving your complaint (d
ue to Financial Services Act 2000). They have to give you a full response to your complaint within 8 weeks. You can also go to the Financial Services Ombudsman. Previously you had to exhaust all avenues with your lender's complaints team/s, but now you can just go straight to the Ombudsman. It is up to the lender (or bank for that matter) to answer your queries, you do not have to put up with them walking all over you, or simply not responding.

Finally, if you have had a good or a bad experience - tell your friends (especially us here), that way they will know who to trust, and who to look out for.

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