8 min Read
17 Nov 2015

Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

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3 minute Remortgage calculator – find out if you should remortgage & find the best deal

remortgage calculatorIf you know how much your monthly mortgage payments are in £s each month, then in just 3 minutes you will:

  • Find out how an interest rate rise will impact your current monthly mortgage payments
  • Find out the best mortgage deal out there for you and whether you should fix your mortgage or not
  • Find out how much money you will save each month by remortgaging
  • Take the first step to achieving this saving plus find out the 5 things to check when looking for the best remortgage deal

The good news is that there has never been a better time to remortgage because lenders are offering attractive mortgage deals to secure customers from their competitors. However this trend will change once mortgage borrowers start looking to remortgage en masse. That trend will happen once consumers realise that interest rates have to rise.  By that time it will be too late as the best remortgage deals will have already been snapped up and lenders will only offer higher interest rates. So follow these simple steps to see if you should be taking action now.

Step 1 -  Calculator:  How much your current mortgage repayments will increase by when interest rates rise

(Time to complete - 1 minute)

You can use the Government backed Money Advice Service Mortgage calculator to see the impact a Bank of England interest rate rise will have on your current mortgage repayments. To do this first load the calculator and then enter the following information

  • Property amount – enter the value of your property when you took out your current purchase. For most people that will be the purchase price (e.g £250,000)
  • Deposit – enter the amount of deposit (or equity) you had when you took out your current mortgage (e.g £12,500)

Click 'Next'

  • Mortgage term - simply enter the original term when you took out your existing mortgage (e.g. 30 years)
  • Interest rate – enter the current interest rate you are paying (e.g. 2.5%). If you don't know  the rate then move the slider until the monthly amount at the top of the calculator matches your actual monthly repayments.

Look at the Monthly Payment section

  • Focus on the option (repayment or interest only) which matches your current deal. If you’ve completed the above step correctly then this should match your current mortgage payments in reality.

What if interest rates rise?

  • Now you can see what your monthly mortgage payments will increase to when interest rates rise by sliding the 'Interest rate' slider up.

Step 2 - Now quickly see if there's a better remortgage deal out there

(Time to complete - 1 minute)

  • Use this excellent remortgage calculator which will quickly screen all of the mortgage deals out there and show just the best deals for you.
  • Once the page has loaded scroll down to the inputs and this time enter the current value of your house (as of today) as well as the amount outstanding on your existing mortgage. The calculator will automatically work out the LTV (Loan to Value) on your property, which is what determines the best interest rate you can get.
  • Choose whether you want a variable rate or fixed mortgage. You can always re-run the calculator with the other option. I suggest that you put the fixed term period at 5 years.
  • It makes sense to set the mortgage term to match the outstanding term on your current mortgage deal.
  • You will then be presented with a table of the best remortgage deals sorted by the mortgage interest rate.  You can sort the table however you want and I would suggest sorting by 'total cost'.

You will now see a number of mortgage deals that you could potentially remortgage to. Note down the monthly repayment on the new deal and compare it to your current mortgage to see the difference.

Step 3 – Find out more information

(Time to complete - 1 minute)

The aforementioned remortgage calculator screens all the available deals in the market unlike most comparison sites. Once you have found a deal of interest, using the steps above do not just stop there. If you click 'enquire' next to the deal you can arrange for a no obligation chat with a qualified mortgage adviser from the UK's leading mortgage broker, London & Country (L&C). You have absolutely nothing to lose.

Alternatively you can use the contact box above the L&C best-buy table to request a call back. I would never personally recommend that you remortgage without the help of a qualified mortgage broker, such as L&C. To help you here are 5 questions to ask the mortgage adviser when he/she contacts you:

5 questions to ask when remortgaging

1. Are there any exit penalties if I leave my current mortgage deal?

It's no good arranging a remortgage if it will cost you money to get out of your current deal. Many deals have exit penalties that continue long after the fixed or discounted period.

2. What fees are payable when you remortgage?

There will be fees payable when you remortgage - booking fee, arrangement fee, survey fee and legal costs. Make sure you get a complete picture of these costs so that you can make the proper judgment on whether a particular deal is best for you .

3. Ask what will happen after the deal period expires

You will probably be attracted by a special offer, either a discounted or fixed deal, that will save you money. However, make sure you check what happens when this introductory deal finishes as things may change dramatically. All lenders will provide you details on how the interest rate will be calculated after the special offer ends and make sure that this will still be affordable.

4. Check whether you can make overpayments

There may be times in the future when you want to pay a lump sum off your mortgage to help reduce the term. You need to check your proposed new mortgage deal to make sure overpayment is allowed and if so whether there is any annual limit.

5. Is the mortgage portable?

What happens if you want to move house in the next few years and can you move your mortgage deal on to a new property? Some lenders do not permit this type of transfer or if they do they will charge a fee for the service.

Looking for a financial adviser near you?

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Simply find your nearest qualified and regulated adviser using the UK’s largest adviser search.