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Step 1
Read the terms of your existing mortgage carefully to be sure that there are no penalty fees for paying off the loan early. Most mortgages do not charge penalties for prepayment, but some do, so be sure that yours does not before considering a remortgage.
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Step 2
Know the interest rate on your existing mortgage, and monitor the current mortgage rates being offered to know if the time is right to remortgage. Ideally, you want your new loan to be at least 2 percent lower in interest rate to make the remortgage be a financially sound decision.
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Step 3
Talk to several different mortgage lenders to get quotes. Ask them what interest rate they can offer you, as well as what other fees, such as loan origination fees, they charge. Compare both rates and fees from several different lenders before making a choice on who to remortgage with.
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Step 4
Use a closing costs calculator to determine how much money you need up front to close on your new mortgage. Remortgaging a home has closing costs, the same as it did when you first secured a mortgage. Typically, closing costs are between 3 and 5 percent of the amount of the loan. You can find closing cost calculators online, that are available for your use, free of charge.
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Step 5
Think about how long you intend to stay in your home. To realize savings from a remortgage, you need to remain in the home long enough to recover the costs of the remortgage and then time to realize a profit from the refinance.
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Step 6
Determine how much money you can save each month with the new mortgage. The easiest way to do this is to use a mortgage calculator. Mortgage calculators are also available for use online. Do the math to see how long it is going to take you to recover the closing costs and see a profit.
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Step 7
Apply for a new mortgage loan from the lender offering the lowest rates and fees if your investigation found that you can save money from a remortgage.
