Mortgage refinancing is the process of paying off the remaining amount on a property's existing mortgage with a new mortgage. Refinancing your home loan has the benefits of lower monthly payments, securing a better interest rate, and reducing the time it takes to repay your home. It's also a good option if you want to borrow more to finance home improvements or pay off other higher-cost debts, such as credit card loans.
So, while there are many reasons why you may need to remortgage your property at some point in your life, these are our top tips on how to remortgage your property while avoiding costly mistakes.
Set aside time to research the market
Our best advice is to start discussing your options with your broker or mortgage advisor at least six months before you plan to refinance your property. 
Timing is key, and it's important to line up and apply for a new deal at least three months in advance. In a mortgage environment where interest rates are rising, this will ensure you get a competitive rate and also prevent you from moving to a more expensive standard variable rate at the end of your mortgage term.
Don’t stick with a lender just because it’s easy.
The advantage of refinancing your home loan is that you can save money by lowering your interest rate and monthly payments. The world of mortgages is competitive, and the simple fact is that your current lender may not be the cheapest.
Unlike simply switching to a different mortgage rate with the same lender, remortgaging gives you more options with a new lender. For example, if your income has increased compared to when you first took out your mortgage five years ago, you may be able to increase your borrowing power. You can choose to free up capital for a variety of reasons while securing a more competitive interest rate than your current lender.
However, if your income has decreased since you first took out your mortgage, you may not be able to secure the loan you need to refinance with a new financial institution. Therefore, your best option may be to switch to a new contract with the same lender.
Shop around for the best options
Your best option may not be the one with the lowest monthly payments, but the one that lets you pay off your mortgage faster and saves you more money in the long run.
Your current lender may offer reasonable retention products, including better interest rates if you continue, but you tend to find that you get the best deals when you change lenders.
If you need additional borrowing, taking a further advance on a new second mortgage (i.e. a second mortgage on the same property) from your existing lender may be a better option than refinancing. It's worth considering all options before making a decision.
Don't guess the value of real estate
It may be tempting to estimate how much your home's value has changed since you bought it, but knowing how much you can spend or save with a new mortgage requires an accurate valuation.
If your property has increased in value since you first took out your mortgage, your loan-to-value figure may fall if you choose to remortgage. This means less risk to mortgage lenders and potentially lower interest rates depending on the current interest rate environment.
Correct valuation is also important if you want to release your stock. However, you should be aware that if you do this, you'll be taking out a larger loan and paying more interest over time. In some cases, it may be cheaper to secure a short-term bank loan if you want to make home improvements or make improvements to your home. Pay for your holiday.
Please prepare your documents
The process for refinancing your mortgage is much the same as taking out a new mortgage. This means that you may need a lot of paperwork, so the sooner you can get it all together, the faster the whole process will be. You'll need proof of identity, proof of address, proof of income, bank statements, and you'll also take the same affordability test that's required when applying for a new mortgage. When you start filling out forms, it's worth keeping all your documents in a safe and easily accessible place.
Remember that there are associated fees
One of the main things to consider when refinancing a property is fees and whether these costs make financial sense overall.
Some financial institutions may make you pay a fee if you cancel your contract early, as long as it is still within the fixed period. This fee is usually a percentage of the remaining term of the fixed contract. In addition to this, there may be a termination fee to cover administrative costs.
Your new lender will also charge you the same origination fees as when you take out a new mortgage.
Refinancing a property also involves legal procedures, which usually take two to three weeks. Most financial institutions offer free legal services, but it can take some time. Some lenders offer a cashback service, where the lender pays the borrower an amount (usually £250) which is then used to fund hiring their own solicitors who can work more efficiently .
And remember…
One of the most important things to remember is to keep an open mind. Many people think that refinancing their mortgage is as simple as choosing a new interest rate, but that's not the case and it's worth seeking advice from your mortgage broker. Refinancing your mortgage is a good way to rebuild your finances and can lead to greater savings in the short or long term.
