Remortgages

Remortgaging can save you hundreds, possibly thousands of pounds each year. If you’re on a standard variable rate (SVR), you’re likely paying too much for your mortgage.

Remortgaging isn’t suitable for everyone, so we’ll look at what’s possible and how to find the best deal by comparing mortgage rates.

What does remortgaging mean?

A remortgage is when you apply for another mortgage with a different lender. Your new mortgage would replace your current mortgage and lender.

If you switch mortgages with your current lender, this is known as a product transfer rather than a remortgage.

Why should I remortgage my home?

There are several reasons to remortgage your home, such as:

  • Your current deal is ending – When your fixed-rate period ends, your mortgage will switch to a standard variable rate, which can be expensive. Remortgaging can give you a new deal with a lower interest rate.
  • Release equity – You can borrow more against your property to release equity. However, as you borrow more, the cost of your mortgage is likely to increase.
  • Overpayments – If your current lender doesn’t allow you to make overpayments on your mortgage, you can remortgage to a lender that will.
  • A higher property value – If your property value has increased, your loan-to-value will be lower, unlocking better rates.
  • Pay off debt – You can remortgage to use your equity to pay off debt. Debt consolidation allows you to repay debt at a lower rate of interest.
  • Change how you repay – You can change how you pay your mortgage. For instance, an interest-only to a repayment mortgage or from a fixed-rate to a variable-rate mortgage.

When can I remortgage?

You’ll typically remortgage when your fixed deal ends. Start searching for deals around six months before your mortgage expires. During this time, you can lock in a mortgage rate, which protects you against rises in interest rates.

If you remortgage during your fixed period, you’ll likely have to pay an early repayment charge (ERC).

Read more: Should I remortgage early?

How much does it cost to remortgage?

The cost of remortgaging depends on the deal you’ve chosen, your interest rate and the amount you’re borrowing. Each lender also charges different fees, such as:

  • Arrangement fees – Lenders often charge arrangement fees on deals with the lowest interest rates. These fees can range from £500 £2000, and you can add the cost to your mortgage.
  • Valuation fees – A remortgage valuation can cost £200-£300, although some lenders include this for free.
  • Solicitor fees – Some lenders charge £300 legal fees to switch mortgages, but others include them as part of the deal.
  • Early repayment charges (ERC) – An ERC is typically a percentage of your mortgage, which can be expensive. You’ll pay an ERC if you remortgage during your fixed period.

How can I remortgage my home?

To remortgage, you’ll need to do the following:

  1. Apply for a new mortgage – When you’ve found the deal you want, you’ll need to begin the process by applying to your new lender. You must provide documents such as payslips and photo ID to start.
  2. Remortgage assessment – Your new lender will assess your income, property value and credit history to check whether the mortgage is suitable. Once agreed, they’ll make you a formal mortgage offer. 
  3. Completion – A conveyancer will ensure the remortgage is legally compliant, which can take 1 to 2 weeks. If you’ve released any equity, you’ll be paid at completion, as will your previous lender.

How can I find the best deal?

You can take the following steps to improve your chances of getting a better deal:

  • Compare deals – Don’t just look for the lowest interest rate. Fees can make a mortgage more expensive, so calculate the overall cost and compare as many mortgages as possible.
  • Secure a mortgage early – Give yourself enough time to find the best possible deal. Locking a rate in can also protect you from rises in interest rates.
  • Speak to an expert – Comparing different rates can be difficult, especially when there are hundreds of lenders. Our experts can guide you through the process and search the market for you, ensuring you switch to a suitable deal.

FAQs

Remortgaging works by replacing your existing mortgage with a new deal from a different lender.

Your new lender will settle your current mortgage by paying your old lender. Your new lender would then secure the new mortgage against your home.

Yes, you’ll need a solicitor or conveyancer to remortgage. A conveyancer will update your title deeds with a charge from your new lender and remove your old lender.

Some lenders may offer legal work as part of their remortgage deal.

It takes two to six weeks to remortgage and rarely takes as long as your first mortgage.

Lenders may not require a mortgage survey and often handle the legal work.

Yes, it’s possible to remortgage with bad credit. That said, your approval will depend on your credit issues, how recent they were, and the lender you’ve applied with.

Speak with an advisor who can check your application in further detail.

Read more: How to remortgage with bad credit

If you’re switching to a new mortgage with the same lender, it’s a product transfer rather than a remortgage. This is because you’re changing products but not lenders.

If you want to release equity and borrow more from your current lender, it’s known as a further advance.

If you’re changing lenders, you may require a valuation, although your lender will arrange this.

You’ll unlikely need a valuation if you’re swapping deals with your existing lender. In some cases, lenders may use online valuations to assess the value of a property.

You’ll need equity to remortgage. Most lenders will only let you remortgage up to 90% LTV.

You can remortgage to release equity by borrowing more with your existing mortgage. The cost of your mortgage will increase as you borrow more, so your lender will check whether your new mortgage is affordable.

You can remortgage before your fixed period ends, but you’ll likely be billed for an early repayment charge (ERC).

An ERC is typically a percentage of your mortgage, so you’ll need a good reason to remortgage earlier than planned.

You’ll need to provide the following documents to remortgage:

  • Your last three months’ payslips and P60 tax form
  • 2-3 years’ accounts/SA302 if you’re self-employed
  • Your last three months’ bank statements
  • Passport or driving licence
  • Proof of address, such as a utility bill

You’ll also need to provide your mortgage redemption statement, which outlines exactly how much you owe on your mortgage. Your new lender will base your new mortgage on this amount unless you want to release equity.

You can remortgage if you’re self-employed, although it can be more complicated. Your new lender will require accounts or tax returns for at least two years. Showing a healthy income before remortgaging can help your assessment.