How to remortgage

Key takeaways

• A remortgage is a new mortgage deal that replaces your existing one, aiming to save money with a lower interest rate or better terms

• Remortgaging your property can be done to avoid higher standard variable rates (SVR) after initial deals end, to borrow more for debt consolidation and home improvements or to switch lenders for improved customer care

• You can remortgage anytime, but consider early repayment charges if within the fixed term

When it comes to homeownership, the mortgage that you start with might not always be the one you stick with.

Whether you're looking to save money with a better rate or adjust your borrowing to suit new circumstances, understanding the ins and outs of remortgaging is essential.

What is remortgaging?

A remortgage is essentially a new mortgage deal that takes the place of your existing one.

While it may come with certain costs, the aim is to save money by securing a lower interest rate or more favourable terms.

Why should I remortgage?

Banks and other lenders offer discounted rates to attract new customers. But once these deals come to an end – for example, after three or five years – mortgage borrowers pay the lender’s standard variable rate (SVR). Bear in mind that this is usually significantly higher.

One of the primary reasons to consider remortgaging is the expiration of these discounted rates. Once these initial offers end, you might find yourself on a higher SVR, which can lead to a substantial increase in your monthly payments. By remortgaging to a new deal, especially when interest rates have dropped, you could potentially save a tidy sum—provided the savings outweigh any early repayment charges you might incur.

Other compelling reasons to remortgage include:

• The desire to borrow more money, which could be for reasons such as consolidating debts or funding home improvements.

• A dissatisfaction with the service level of your current lender, prompting you to look for better customer care elsewhere.

How to remortgage

• Review the details of your existing mortgage, noting the interest rates, monthly payments, and any fees associated with switching.

• Compare remortgaging deals or consult with a mortgage broker to explore the deals on the market. You'll need to provide information like the value of your home, how much of your mortgage is left to pay, your desired payoff timeline, any additional borrowing needs, and the type of mortgage you're interested in.

• Once you've identified the lender offering the best deal, taking into account all fees and interest rates, you'll need to complete an application and provide necessary documentation, such as proof of earnings.

• If you're switching lenders, you'll need to find a conveyancer or solicitor to manage the legal aspects of the mortgage transfer. If you're staying with the same lender, this step is often not required.

How soon can you remortgage?

Technically, you can remortgage at any point, but be mindful of any early repayment charges that may apply if you're still within the terms of your existing mortgage. For example, if you’re on a fixed-rate deal lasting three years, you’ll usually have to pay a charge to exit the deal within the first three years. So, if you want to switch within this time, you must take this penalty charge into account when working out how much you could save.

Most homeowners choose to remortgage when their current deals are coming to an end. If this is the case, it’s worth starting to look for a new deal before your deal ends, as remortgaging can take a month or more.

Further reading: The best time to remortgage

Should I remortgage with my current provider?

Opting for a product transfer with your current lender can be a quicker route with fewer checks involved. Additionally, some lenders may offer to waive the early repayment charges if you choose to stay with them, which can make staying put a more attractive option.

Further reading: Remortgaging with the same lender

What are the costs involved in remortgaging?

When you're considering remortgaging, it's important to be aware of the potential costs, which can include:

• An arrangement or product fee, which is typically around £1,000.

• A booking fee that may fall between £100 and £200.

• A valuation fee, which is usually about £300, unless the lender offers this for free.

• Legal fees, generally around £300, although some lenders may cover this cost.

You might also face an exit fee from your existing mortgage (up to £300) and potentially hefty early repayment charges (ERCs).

For a full breakdown, read our guidance on the cost of remortgaging.

Do I need a solicitor to remortgage?

Yes, there is legal work involved in remortgaging, so you'll likely need a solicitor's services.

Some lenders include legal services as part of their remortgage package, which means you won't have the option to choose your solicitor. However, selecting your own solicitor can provide better transparency in terms of costs.

You can compare conveyancing solicitors through MoneySuperMarket if your provider doesn't provide it as part of the remortgaging process.

What if my circumstances have changed since I took out my mortgage?

Changes in your circumstances can certainly impact the remortgage offers you might receive. If your financial situation has improved, you could be in line for more favorable deals. On the flip side, if your circumstances have worsened, it might be more challenging to meet lender criteria, although remortgaging with your current lender could still be a viable option.

Can I remortgage my home to purchase a rental property?

Yes, remortgaging your current home can be a way to raise funds for buying a rental property. If you’re looking to purchase a buy-to-let property, remortgaging your home could be a helpful way of doing so. In fact, remortgaging your current property could allow you to save money and raise enough funds to buy a rental house.

You should carefully consider any potential drawbacks, as taking out two mortgages can be financially demanding.

Is there an age limit on remortgaging?

While there's no legal age limit for remortgaging, lenders have their own criteria, and those over the age of 70 may find it more difficult to secure suitable deals. MoneySuperMarket provides a platform to compare deals, even for those in retirement.

How can I find the best remortgage deal?

The best remortgage for you will depend on factors such as how much you earn and how much you owe in relation to the value of your home. This is known as the loan-to-value (LTV) ratio. The cheapest remortgage deals are reserved for homeowners who:

• A significant amount of equity in their home (at least 40%).

• Good credit scores.

• High or stable disposable incomes.

Improving your credit score and reducing your debts can enhance your chances of securing a better deal. It's also important to decide which type of mortgage suits you best—be it fixed, tracker, or variable.

How to remortgage with MoneySuperMarket

MoneySuperMarket simplifies the process of comparing remortgage deals. By answering a few questions, users can view mortgages that match their needs and refine their searches without impacting their credit score.