What’s the single most important thing for any mortgage applicant to prioritise? It isn’t always getting approved, nor does it have anything to do with saving a deposit. In our experience, the most important factor that needs to be considered when applying for a loan on a home is a great deal. It’s no secret that low interest rates can make a huge difference to a repayment plan – but there might be times where the agreed rates become a little hard to swallow; or skyrocket way beyond any amount that you may have been expecting.
In these cases, there will always be the option to refinance, or re-mortgage; but did you know that you could do so with a completely different bank than the one that originally approved your home loan?
The Beauty of the Loan Industry
Loans are a dime a dozen and although you might need to put a little more effort into your mortgage application than you would with say, a car loan – the options to negotiate and change your mind are still there. As a borrower, you will be entering into a contract with your chosen lender, even if you’ve done so via a third party mortgage broker.
But where the bank will be obliged to uphold this contract by law – you as the borrower will be able to enjoy a more flexible approach. For instance, if you have been paying back your mortgage for five years and then decide that another bank is offering a better deal, you might want to take advantage of the more beneficial alternative.
In these cases, most people overlook the potential of re-mortgaging, but the truth is that this is an option to anyone willing to approach a bank (or have a broker take care of this event for them)
How Does Re-mortgaging Work?
This will depend on whether you are hoping to re-apply to the bank that has already given you your mortgage loan, or if you plan on switching. In the first instance, you will need to approach your lender and let them know that you’d like to re-mortgage. They might reject your request, but if you let them know that you’ll take your business elsewhere, they might be more inclined to help.
In the second case, you won’t have to tell your own bank about anything until you’re ready to change. You will then be able to approach another lender, come to a new agreement with them and let their institute pay off what’s owed on your mortgage to your previous lender, before implementing your new deal to ensure that they get their money back, with interest.