Mortage customer service

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Millions of people may be considering remortgaging their homes as a result of the latest interest rate rise.

A recent survey found that 14 per cent of households would want to refinance if their monthly repayments rose by £50, almost 40 per cent would remortgage if repayments increased by £100 and more than half would look for a better deal if repayments went up by £150.

They will join the millions who have already renegotiated the loan on their biggest asset for reasons ranging from debt consolidation to improving their lifestyle on the back of house price rises.

A typical two-year fixed rate mortgage taken out in August 2005 was 4.68 per cent, against a standard rate of 6.6 per cent. The comparable two-year fixed rate today is 5.71 per cent, against a standard rate of 7.17 per cent*.

Remortgaging - whether with a new lender or by negotiating with your current lender - is a comparatively simply process in the UK, providing that you have sufficient equity in your home. But it isn't all plain sailing.

Your credit status

If you have a healthy credit rating, you should have a choice of good deals.

But very few people know how a credit rating is calculated and only five per cent of us have ever seen our credit report.

This is the history of your borrowings, repayments and other relevant information, which lenders see when they decide whether to make you an offer and what terms to set.

It is crucial that your credit report is up to date and accurately reflects your circumstances, so you should check it before you even think about applying for a new mortgage. One error or oversight could increase your interest rate offer from a lender - and hundreds of pounds - to your repayments.

Benefits for new customers

Most of the best deals are targeted at new customers, which is what you will be if you shift from one lender to another.

But you may have to pay redemption penalties when you terminate the arrangement with your existing lender, plus an arrangement fee to the new lender, who will also want a survey of your home - and that usually has to be paid for too. The process of moving your mortgage can easily cost more than £1,000, which can take a long time to recoup.

Finding the right deal