Remortgaging to a better deal is a great way to cut your costs - it could save you hundreds of pounds a month and thousands of pounds overall. However, it is not always an easy undertaking. Here are 5 things you need to know before you begin.

Switching your mortgage to a better deal is definitely worth doing but isn’t always as straightforward as you might hope.

However if you know what to expect and the obstacles you’ll have to overcome it can make getting the best mortgage and the biggest savings a lot easier.

Here are 5 things you need to know before you look to remortgage so that you and your finances are prepared for what’s to come.

1. It takes longer than you’d expect

Remortgaging to a new deal is by no means a quick process and you could find that it takes a lot longer than you’d expect.

However, the savings you can make over the years will easily make the few weeks you’ll have to wait worthwhile.

Check what your existing lender offers. If you can stick with your existing mortgage provider but re-mortgage to a more competitive product then you are not only likely to save on some of the fees involved but it is likely to be an easier and quicker process to complete.

So if you are looking to remortgage your first step should be to speak to your existing mortgage provider to get an idea what mortgage products they can offer you and the fees they charge. Compare this offer with other lenders

Once you know what your existing lender can offer, you need to compare this with what else is available from other mortgage providers.

Although it may take longer to complete, if you find that a different lender can offer you a mortgage that turns out to be significantly cheaper it’s worth switching. Visit our remortgage comparison table to compare the different remortgage deals currently available.

Overall a remortgage is likely to take somewhere between 4-8 weeks depending on the mortgage product you take and whether you stick with your current lender, although it could be considerably longer if you encounter any complications during your application.  

2. You’ll pay fees

As a mortgage holder you will already have some experience of the type of fees that you have to pay when applying for a mortgage. However, you may or may not be surprised to learn that the same fees and some new ones crop up when you look to move your mortgage.

While the exact fees will depend on the deal you apply for, they're likely to include:

Exit fees

Many mortgage providers include an exit fee in their mortgage terms and conditions. This is different to an early repayment charge and can often be several hundred pounds.

Check your existing mortgage to see if you will have to pay an exit fee when you re-mortgage and consider how you would like to pay.

Application and product fees

As well as paying to leave your existing mortgage you will usually have to pay an application or product fee to cover the administration costs of your new mortgage.

These fees can be anywhere up to £2,000 depending on the remortgage deal so can add a considerable cost to moving your mortgage.

Some mortgage lenders now calculate their application fees as a percentage of the amount you borrow, which can make things even more expensive if you have a large mortgage.

You may be offered a fee free mortgage deal; however the interest rate is likely to be higher increasing your long term costs.

So compare the total cost of mortgages with and without application fees - it may be better to pay more up front to make greater savings later.

If you do have application fees to pay you may also be given the chance to add them to your mortgage, if possible try to avoid this as it will only increase the cost of switching your mortgage and mean you are charged interest on the fees as well as your mortgage.

Make sure to check exactly what you are paying in application fees, how you are expected to pay and if there is any way that your new lender can reduce them.

Solicitor fees

Another significant expense to expect when you remortgage your home is solicitor’s fees. If you’re switching provider it’s likely that you’ll need to have the same searches you had when you bought your property carried out again.

You may be able to cut your legal costs by using the same legal firm that handled your original mortgage application – as they may still have some of the original paperwork and searches on file form your first application to reduce your costs accordingly.

However, chances are that your legal fees will still be at least £300 + VAT, possibly more depending on the size of your mortgage, plus the cost of the searches.

Survey fees

Although you’re not actually moving home - just your mortgage - your new lender will still need to thoroughly assess the standard and value of your property.

This means that you can expect to pay for a valuation of your home to assess the level of equity you hold.

The cost of a valuation survey can vary depending on where you live but usually comes in at £250-£400.

If you had a home buyers report or a full structural survey completed when you purchased your property then you may not need to have a full survey when you remortgage.

Borrowing more costs more

As well as all the fees listed above, if you are borrowing more than 75% of the value of your property, you may have to pay an additional Higher Lending Charge (HLC ).

Most lenders will not apply a HLC unless you are borrowing more than 90%, although it is always worth checking before you start a mortgage application exactly what you’ll be expected to pay.

3. You’ll need ID and lots of it

As a mortgage represents such a big financial commitment for all concerned chances are that you’ll need to provide several different forms of ID for each person who will be named on the mortgage documents.

Mortgage providers are quite picky with the type of ID that they consider acceptable and what is accepted by one mortgage provider may not be taken by another.

Your passport and driving licence are likely to be your safest bet, with recent water, gas or electricity bills also acceptable as proof of address in most cases.

However, many banks and building societies will not accept, council tax bills, mobile phone bills or letters from benefit agencies.

Bank statements and credit card bills may also be used as proof of address but may not be accepted by all institutions.

When you are applying it is worth checking exactly what is and isn’t accepted by your new mortgage provider so you can ensure you have the necessary proof. If you are applying for a joint mortgage with your partner then you will need to make sure that you both have sufficient ID and proof of address.

You are also likely to need to proof of income as well, usually consisting of your last 3 pay slips or formal confirmation of your salary and benefits from your employer. Copies of recent bank statements showing the payments entering your account may also be requested.

As well as all the above personal information you are also likely to need to send off a copy of your home insurance policy to prove to the lender that you have adequate cover in place.

4. Expect lots of calls

It could be argued that the process of remortgaging is in some way more complex than applying for an initial mortgage as you could be dealing with two different lenders.

Even if you are simply changing your mortgage product with your existing lender, you should expect to have to spend time arranging viewings and discussing your application – both with your solicitor and lender. Keep focused on the fact that it will be worth it once your remortgage is complete and you've secured a competitive deal that will help you save.

5. Banks will try and sell you extras

Many banks and buildings societies view a remortgage application as an opportunity to sell their customers lots of extra products.

Buildings insurance

If you have an existing mortgage then there is a good chance that you will already have a buildings insurance policy in place.

However, if you are switching providers and held your buildings insurance with the same provider as your mortgage you may find that the policy is cancelled when you move.

As a buildings insurance policy is often a condition of a mortgage – a bank needs to insure the asset that your loan is secured against – you may need to look for a new policy.

However, just because you have to have a buildings insurance policy doesn’t mean that you have to take it out in conjunction with your new mortgage – in fact in reality these policies are often overpriced.

Instead compare the best buildings insurance policies on the market to make sure you are getting the best possible cover at an affordable price.

Mortgage payment protection insurance

How would you afford to pay your mortgage if you could no longer work?

If you are going through the re-mortgaging process you can almost guarantee that you will be asked this question at some stage.

Again what you need to consider is not only whether you need Mortgage Payment Protection insurance, but whether you need to take it from them without comparing what else is available independently.

Read our guide How do you Choose the Right Mortgage Protection Insurance Policy? For more help, or visit our mortgage payment protection comparison table to compare the best policies on the market. Other additional extras

Other products that may be thrust under your nose include life insurance, contents insurance and emergency services cover.

All of these policies are available independently and you may already have.

Don’t be pressurised into taking out extra financial products at greater cost without first asking if you need them or checking if they are the best of their type.

Although it may seem that remortgaging is a hassle you might do without, it's important to remember exactly how much you can save - if you secure a good rate, the savings that you'll make will make it more than worth your while in the long run.

Read more at: http://www.money.co.uk/article/1006992-5-things-you-need-to-know-before-you-remortgage.htm#ixzz1OZtAIh4L