A popular alternative to a further advance

Peter Mounty, head of communications and quality, Cheltenham & Gloucester Remortgaging is a popular alternative to a further advance because consumers are happy to search for a better deal, fuelled by media cajoling and better financial awareness. Also, lenders are keen to use remortgaging as a retention tool as well as to attract new customers.

But those considering remortgaging should be mindful of a few things. Firstly, they should think why they are remortgaging. Increasingly common reasons include large purchases such as cars, holidays or home improvements, but borrowers should remember that paying for a car or a holiday over 25 years or more is not the best option. On the other hand DIY home improvements add value to the home and borrowers are likely to recoup some or all of the cost incurred when they sell the property.

Borrowers should also check how much remortgaging will cost them. Some deals offer super-low rates but also carry big fees. Many lenders offer fee-free remortgaging but some will charge a mortgage indemnity guarantee if the client is increasing their borrowing, while the current lender may charge an early repayment charge if the client is trying to get out early. So clients should be careful to weigh up the costs before they jump in.

It is also important to see what the current lender can offer. Lenders are keen to use remortgaging as a way to retain customers and most now have retention units. However, customers often feel it is a good idea to remortgage no matter what. Their current lender will be keen to keep hold of customers so it is always worth discussing things with them. And of course brokers have a vital role to play in the remortgage market, searching out a better deal for customers and bringing good remortgage business to lenders.

So although the remortgage market may be looking sluggish in the first quarter of the year, Easter is sure to bring an increased enthusiasm for home improvements and so remortgaging levels will be boosted.