While being part of an active mortgage offer, it can sometimes be a hassle to renew your mortgage plan. Sure, you can sign the renewal form sent at the end of your current mortgage plan. However, you can also apply for other options as mortgage rates are lower than ever. Depending on your current mortgage plan, you can get a better offer if you change it now. If that’s the case, then you have come to the right place. With the help of this guide, you will find out what to do if you plan to change your mortgage plan.
- Make Up Your Mind
- Consider Your Current Financial State
- Let the Hunt Begin
- Sit Down With Your Current Lender
- The Decision
Make Up Your Mind
The first step to changing your current mortgage is knowing why you are changing. This not only makes the rest of the process much easier, but it also helps you explore options according to your circumstances. Maybe you are looking for a plan where you can pay off the loan quicker. Alternatively, you want an offer that is a comparatively cheaper option compared to what you have now. You must keep all of these things in mind while getting a new plan. Along with reasons for changing, you should also look for what you want in a new mortgage plan.
Consider Your Current Financial State
In the duration of your current mortgage, a lot might have changed. Your financial status now might be better or worse than at the time you started your mortgage. You could have started a family or need to pay for the tuition of your children. Moreover, someone in your family might be undergoing surgery for which you are willing to save. You could’ve also gotten a raise at your job or have retired, all these circumstances definitely affect your spending. That said, you could always go for a cheaper alternative like fixed-rate mortgages. Nevertheless, cheap doesn’t always mean the best so be careful while choosing your plan and who is offering it.
When getting a mortgage is such a tedious process, you can only imagine how much of a hassle remortgaging can be. Therefore, the wisest thing to do would be to consult a professional. However, it should not be just any professional. It should be a private mortgage advisor. A private mortgage advisor is not entitled to any company or firm and gives you information based on your current circumstances. As they have information from all companies and financial institutions they can further help you make a better decision. You will, however, have to be careful as either they can be costly.
Let the Hunt Begin
The best time to start your mortgage hunt is precisely 120 days before your current mortgage plan ends. Now you might think, “Why four months early.” Well, simply put, many mortgages take at least 120 days to process. If you aren’t willing to start the mortgage process yet that’s okay at least you should start your research and keep a backup plan. Another reason for 120 days prior is so that you do not violate the agreement with your lender. Most lenders allow you to start a new mortgage plan 120 days before your current one expires. This way you won’t have to pay the penalty for abandoning your previous contract.
Sit Down With Your Current Lender
Now that you have finally decided to change your mortgage deal, it’s worth giving your old lender a chance. Talk to them and see if they are willing to match the same terms. You must always try this, as you never know the customer service provided by a different lender. Your current lender might have been lenient with you in many ways. Therefore, it is always better to negotiate with them than not to. In the case that the negotiation doesn’t turn out as planned, the law is on your side. According to the law, your current lender must send you a renewal letter for your mortgage at least 20 days prior. That said, many firms send the letter 30 days earlier. This gives you 30 days to apply for a new mortgage plan by a new lender. Furthermore, this will not be in violation of your contract with your previous lender. During these 30 days, no changes will come to your mortgage plan. Therefore, by now you should have enough research to determine the best possible plan for you.
Now that you have made up your mind about remortgaging, you have a decision to make, Do you leave your current lender or not? If you feel like your current offer is reasonabl3e and none of your circumstances have changed then you can stay. However, if your circumstances have changed and you are looking for a different kind of plan, then negotiation is not far-fetched. Nevertheless, if the negotiation doesn’t go as planned and they stay firm with their offer you can change lenders. That’s easier said than done because the process of changing lenders requires a swell of new and stressful paperwork. This new paperwork will give you access to the new lender’s plans and offers. Be sure to go through the terms of your new plan, as they could be very different from what you had before. Moreover, application forms and documentation required all vary from lender to lender, so keep that in mind as well.
In conclusion, be sure to do plenty of research before applying for a new mortgage and keep in mind the multiple fees related to this switch.