Moving Mortgage

Many homeowners could benefit from switching mortgage provider, experts suggest. BBC News explains how to go about remortgaging.
Can remortgaging really save money

It is estimated that more than half of all borrowers are continuing to pay over the odds for their mortgage each month.

Usually these people are paying the lender''s standard variable mortgage rate.

Switching to a cheaper mortgage deal is one of the easiest ways that homeowners can save money.

For example, someone with a £100,000 loan who switches from a standard variable rate deal could save about £1,000 a year for each one-percentage point reduction in their interest rate.

Remortgaging has become much easier in recent years.

More lenders are offering specialist remortgaging services - often with free legal and arrangement fees thrown in.

My neighbours have told me that you can borrow more money through remortgaging, is this right

Yes. Remortgaging is not only about saving money.

As well as reducing your monthly payments, you can also use remortgaging as a way of releasing some equity that has built-up in your property''s value.

If you are tempted to release equity, it is still important to be cautious even though rates are so low.

Borrowing through your mortgage may be much cheaper than taking out a personal loan, but the debt is secured.

This means that if you can not keep up with additional payments, you could risk losing your home.

Where do I start

The first step is to check the terms and conditions of your existing mortgage.

These will tell if you are tied-in to your mortgage deal or if there are any redemption penalties - sometimes phrased as early repayment charges.

If you are locked-in, you must decide if it is worth switching to a different rate or stay put until the penalties have expired.

You may have been with your existing lender for a long time and feel a sense of loyalty towards the company.

However, most lenders do not reward this loyalty with a reduction in rates.

You should therefore expect to shop around and look towards a different lender to get a better deal.

You can either go direct to a lender or try a mortgage broker who will scour the market for you.

The advantage of using a mortgage broker is that they will look at what different lenders are offering and they often have special deals, which are not available elsewhere on the High Street.

Which deal is best for me

You will face a choice of broadly four types of deal: fixed, capped, discounted and flexible.

Fixed-rate schemes are ideal for people who want certainty and must be able to regulate how much they will be spending each month.

The rate is usually fixed for between two and five years.