When is the best time to remortgage your home?
You can remortgage to a new deal or lender at any time – but you need to consider interest rates and any fees you'll pay to switch
Key takeaways
Remortgaging involves replacing your existing mortgage with a new deal — either with your current lender or a different one.
The remortgage process is similar to the initial mortgage application, involving proof of income, a credit check, and property valuation.
You can avoid higher rates by switching before your current deal ends and locking in a competitive fixed rate to protect against future hikes.
Remortgaging is when you take out a new mortgage on a property you own.
Homeowners normally do this for one of the following reasons:
to switch to a cheaper mortgage deal
to borrow money against the value of their property
due to a change in circumstances – i.e. buying an ex-partner out of a property
It can sound intimidating, but for many homeowners the process is straightforward — particularly if your finances haven’t changed significantly.
You’re allowed to apply to remortgage at any time, though there’s no guarantee you’ll be approved – but there’s definitely a time and a place to do it.
How does remortgaging work?
Remortgaging means changing mortgages by moving to a new lender. Transferring to a different deal with your current lender is known as a product transfer.
The application process for a remortgage mirrors the initial mortgage application. You'll need to provide proof of income, undergo a credit check, and have your property valued to ensure it meets the lender's criteria. Lenders will reassess your affordability, so even if you've kept up repayments, approval isn't automatic, especially if your income or outgoings have changed.
You should do your homework before deciding to remortgage. You should only make the application after you’ve carefully compared your current deal with those available on the market, preferably by looking at a range of providers, including the one you’re with at the moment.
This comparison will ensure you're not missing out on a better rate or more suitable terms.
When is the best time to remortgage?
The best time to remortgage is when switching could save you money or better suit your current circumstances.
This could mean lower monthly payments, reduced overall interest, or the ability to borrow additional funds for important life events or investments.
There are several scenarios where remortgaging might be the right move:
Your fixed-rate mortgage deal is coming to an end.
You're concerned about rising interest rates and want to secure a better rate.
Current interest rates are lower than when you took out your original mortgage.
You've built up significant equity in your home.
When you want to overpay and your lender won’t let you.
You want to buy someone else out of a property owned jointly
Remortgaging when your current deal is ending
Most favourable mortgage deals, such as fixed-rate and tracker mortgages, are short-term, usually lasting between two and five years.
When these deals end, you'll be moved to your lender’s standard deal – a standard variable rate mortgage, which often comes with a higher interest rate.
To avoid this hike in payments, it's wise to start comparing deals around three to six months before your current deal expires. Many lenders let you secure a rate in advance and switch when your existing deal ends.
Early repayment charges are normally levied if you switch deals while still in the initial term of a fixed rate.
Remortgaging while interest rates are rising
When rates are rising, as they did rapidly during 2022/23, it can be smart to lock into a competitive fixed rate to protect you from future hikes.
However, on the flipside, if interest rates fall, you might be paying a higher rate than necessary.
Timing matters, especially if you're nearing the end of a fixed deal and want certainty over future payments.
Remortgaging when you’ve built up equity
An increase in your home's value can make you eligible for lower mortgage rates.
The loan-to-value ratio (LTV) is the ratio that indicates how much money you’re borrowing, compared to the total value of your property.
In general the lower your LTV, the better the mortgage rates you’ll be approved for.
Again, however, it’s important to consider the impact of any early repayment charges.
Remortgaging to borrow money
If your home's value has risen, you might be able to borrow more through remortgaging.
Lenders typically favour purposes like home improvements or debt consolidation rather than borrowing for holidays or new cars.
But remember, this isn't free money; it's a loan secured against your home.
Before you take this option, make sure this really is the cheapest way for you to borrow money. Your home could be at risk of repossession if you don’t repay the debt.
Other forms of loan are available, which may come with a more favourable interest rate and less risk of losing your home.
Remortgaging to overpay
Perhaps you've come into some money and want to pay off your mortgage faster.
Most lenders allow limited overpayments, often up to 10% of the balance per year, but exceeding this can trigger early repayment charges.
Remortgaging with a new lender could allow you to reduce the loan size and potentially secure a cheaper deal. Just be cautious of early repayment charges or exit fees.
Compare remortgage deals
Finding a new mortgage deal is quick and easy with MoneySuperMarket.
All you need to do is provide us with a few details about yourself, your property and your current mortgage and we will do the rest.
You can sort through a range of remortgage deals offered by leading lenders from across the market. We'll show you the initial rate and monthly cost, plus any associated mortgage fees so you can make an informed choice. If you're just after a quick calculation, our mortgage repayment calculator can help.
Mortgage Adviser, Fluent Money
"It's easier than many people think"
Remortgaging simply means choosing a new deal when your current rate is coming to an end. It's easier than many people think and does not require you to borrow more or change lender unless you want to.
Most lenders allow you to secure a new deal three to four months before your current one finishes, although our advisers can start exploring your options around six months in advance. If a cheaper rate becomes available, we can update your application without any extra effort for you.
Only around one third of customers act early. Many worry about making the wrong choice and end up leaving the decision until the final moment. Although there are situations where waiting is sensible, most customers benefit from looking early and removing last minute pressure.
It’s also worth saying that your options are not limited to staying or switching. You can adjust the length of your mortgage, borrow extra for home improvements or consolidate debts in the right circumstances. A qualified adviser can guide you through every choice and make sure the decision suits your plans.
Key points
Remortgaging is simply choosing your next deal.
You can start exploring your options six months before your rate ends.
Acting early gives you more choice and less pressure.
You can also adjust your term, borrow extra or consolidate debts.
Your home may be repossessed if you do not keep up repayments on your mortgage
Author
Ashton Berkhauer
General Manager • Commercial
Currently the General Manager for Home Services and Mortgages, Ashton observes the markets and, along with his team, strives to get the best possible solutions for consumers. The products within his...
Reviewer
Alan Cairns
Senior Content Editor
Alan helps MoneySuperMarket break down complicated financial topics into plain English, to help you find the right deals. When he’s not writing or editing you might find him cycling the South Downs.
