Last reviewed on 6th August 2023 by Martin Alexander (Mortgage Advisor)
A remortgage can be a quick and easy process. Your current lender may be willing to offer you a better rate, but it’s worth shopping around to get as many quotes as possible. After all, having a great deal can save you a lot of money over the years.
Focusing solely on the lowest mortgage rate won’t guarantee you the best deal. Once you assess the overall market, only then will the best deal become apparent.
If you’re looking to secure a better mortgage rate or wish to borrow more, you can make an enquiry with an advisor. You can also use our comparison tool to compare remortgages.
What fees are there when you remortgage?
When should I remortgage?
Reasons for remortgaging can vary. That being said, the quote you’re offered will be based on the type of remortgage you need.
When your deal is coming to an end
Mortgages often have introductory rates and once they expire, you’ll be paying higher rates. Finding a better interest rate is the most popular reason for remortgaging.
Changing mortgage types
Your financial position may have changed, so switching mortgage types can make perfect sense. For instance, you may want more flexibility, or you may even want to change your repayment type.
If you’ve built equity in your home, releasing capital can allow you to spend elsewhere or on home improvements. Learn more about remortgaging to release equity here.
If you’ve run into some financial problems, you could remortgage to pay off debt. This is more commonly known as debt consolidation. There are risks attached to doing this, so speak to our experts before making a decision.
Help to Buy
If you used the Help to Buy scheme to buy your property, you may want to switch mortgages to increase the amount of equity you have. This is often done to bring monthly mortgage costs down, as Help to Buy can have higher rates than usual.
Read more about how to remortgage your Help to Buy here.
It’s possible to remortgage a shared ownership property to increase the number of shares you own. This is more commonly known as staircasing and can help you to own your property outright.
If you’ve run into credit issues, remortgaging to a better rate can help you to recover from financial difficulty. Furthermore, doing so can allow you to eventually repair your credit score by making your mortgage payments on time.
Learn more about how to remortgage with bad credit here.
Remortgaging a buy to let property can be ideal to make the most from your investment. Switching mortgage deals can help you to keep your monthly costs down, improving your monthly cash flow.
How does LTV affect a remortgage?
The quotes you’re offered will be based on your loan-to-value (LTV) and the type of remortgage you need. Our advisors have access to remortgages at 40-95% LTV.
Loan to value (LTV) is simply the size of the loan in comparison to the property value. A 90% LTV on a £100k property would indicate a £90k loan. The higher the LTV, the more risk a lender is placing on themselves.
If a lender agrees to a 90% remortgage and the property decreases in value by 15%, the lender could make a loss if the mortgage isn’t repaid and they have to repossess and sell the property. For this reason, a remortgage with a higher LTV will typically have a higher rate than a remortgage with a lower LTV.
There are remortgage deals at 90% and even higher, but they tend to be limited, simply because of the risk to a lender. As remortgages with a high LTV are limited, it’s less competitive and therefore rates can be high. The most competitive remortgage rates often start at 75%. Anything smaller than 75% should enable you to secure very competitive rates.
To summarise, if you’re after a high LTV remortgage, your remortgage quote may be higher than if you were to remortgage on a lower LTV.
Reducing the cost of a remortgage
Mortgages come in all different shapes and sizes and as a result, so do the rates. Lenders also vary quite considerably in terms of the remortgage types they’ll consider.
A lender that specialises in bad credit may approve a remortgage where poor credit is concerned, whereas a high-street lender may decline. With all these variables in mind, the value of your remortgage quote has endless possibilities.
A clean credit file with a sizeable income can enable you to secure the best remortgage deals available. A bad credit file or having accounts’ for one year will limit your options and if there are eligible lenders, their rates could be high.
Our advisors have access to specialist lenders for difficult situations, particularly remortgages. You can make an enquiry or simply ask our specialists a question to get started.
About the author
Martin is a senior mortgage advisor and has held a CeMAP qualification for over 15 years while also completing an MBA in Global Banking & Finance.