Tips On How To Use A Remortgage Calculator In 2023

Remortgaging helps you switch from one mortgage to another. Borrowers often switch to a low-interest mortgage deal to earn the difference as a profit. This helps them save money that can be used for making other investments, settling debts, and other relevant purposes.

In most cases, homebuyers remortgage their properties when the fixed term of their existing mortgage is coming to an end. Instead of following the standard variable rate (SVR) that brings uncertainty, people choose to switch to a better mortgage deal to be safe.

However, it is important to know that remortgaging your property is not always the best alternative. People often get carried away by lucrative deals without focusing on the benefits they earn by making the switch. As a rule of thumb, it is advisable for homebuyers to remortgage their properties only if the benefits they earn are more than the expenses they incur. If you end up paying more than you earn, remortgaging loses its essence.

This is where a remortgage calculator comes into the picture.

What is a remortgage calculator?

A remortgage calculator is a tool that helps you calculate the estimated amount you can save on switching your mortgage deal in mortgage broker harrow. It requires you to add specific details about your existing mortgage, its cost, and term to see how much you can earn by switching to a mortgage deal with a lower interest rate.

As you remortgage your property, it is advisable to work with a skilled and experienced remortgage broker in your town. Most mortgage brokers and firms provide their clients with a free remortgage calculator to give them an idea about the benefits they stand to earn.

While different mortgage brokers contain different elements and ask for different details, here are a few common sections found in most remortgage calculators:

• Current monthly payment

• Current mortgage interest rate

• Current mortgage balance

• New interest rate

• Remaining term on the current mortgage

• New mortgage term

• Remortgage costs

How to use a remortgage calculator ?

Here are the most common steps involved in using a remortgage calculator :

1.You can start by entering the interest rate of your existing mortgage deal, the mortgage repayment you make every month, the outstanding balance regarding your existing mortgage deal, and the remaining term on your existing mortgage.

2.Now, you can add the interest rate of the new mortgage deal and the term for which you want the new deal to last. Most remortgage brokers suggest reducing the new mortgage term if the new interest rate is considerably low. While this will not reduce your monthly payments, it will help you close your mortgage faster.

3.If the remortgage calculator has such a provision, add the costs involved in switching your mortgage deal, such as valuation fees, arrangement fees, etc.

4.The calculator may also ask you to add early repayment charges (if any) if you are planning to end your current mortgage deal way too soon.

5.Once you have added the necessary details, the calculator will show you how much you can save at the end of every month after you switch to a new deal. Some remortgage calculators also give you the overall interest you can save and the time it will take for you to recover the fees you paid.

Before you use a remortgage calculator, remember that the results it shows will only be tentative. The exact figures in the event of a remortgage will depend on the lender you work with and your circumstances at the time of remortgaging your property.

Remortgage fees to consider while remortgageing.

One of the primary purposes of using a remortgage calculator is to determine whether your benefits outweigh your expenses. For this, you need to know the fees you are likely to pay as you switch to a different mortgage deal.

Here are the most common remortgage fees you should consider while using a remortgage calculator:

Early repayment charges

Your lender will levy Early repayment charges (ERC) if you choose to end your existing mortgage deal before the completion of its initial period. Depending on the time left for the initial period to end, borrowers may be required to pay up to 5% of their mortgage balance as early repayment charges. Make sure you check your lender’s terms and conditions before remortgaging your property.

Arrangement fees

Also known as product fees, arrangement fees are charged by lenders to set up new mortgages. Depending on the lender you work with and the deal you choose, your arrangement fees may range from £300 to £2,000. In most cases, a mortgage deal with a higher arrangement fee will have a lower interest rate. If you have a bigger mortgage, it is advisable to pay a higher arrangement fee and get a lower interest rate on the new mortgage.

Booking, reservation, or application fees

These are the fees you pay as you apply for a new mortgage. In most cases, you cannot claim these fees back if the remortgage deal doesn’t work out.

Valuation fees

These are the fees your lender will charge to value your property. If you want to reduce or eliminate these fees, you can remortgage with the same lender. Valuation allows mortgage lenders to ensure that your property meets the mortgage conditions and is worth enough to recover money in case you default.

Conveyancing fees

Conveyancing fees are the legal fees involved in getting a new mortgage deal. Just like valuation fees, you can eliminate these fees by remortgaging with the same lender. While a few new mortgage lenders may cover your conveyancing fees, they may not give you the freedom to choose your own solicitor.

Some borrowers also end up paying broker fees, adding to the overall remortgage expenses. If you want to save more and obtain maximum benefits by remortgaging your property, make sure you work with a fee-free mortgage broker who doesn’t compromise the quality of their services.