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How to Remortgage Guide

A handy remortgage guide

published: 27 January 2023
Read time: 5 minutes

You can often save money by remortgaging to a new mortgage deal. Find out more about the process with MoneySuperMarket’s remortgage guide.

Remortgaging is the process of changing the mortgage you have on your house or flat. You can remortgage to a new deal with your existing mortgage lender or switch to a new bank or building society.

Our remortgage guide explains the pros and cons of remortgaging, as well as when and how to do it.

What is a remortgage?

remortgage is any mortgage deal that you can switch to from an existing mortgage. There are often costs involved in remortgaging to a new deal. However, the overall aim is usually to save money by switching to a lower interest rate or by accessing better mortgage terms.

pastel coloured terraced housing

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.

For this reason, many people remortgage to a new deal to save money when their current offer comes to an end. However, you can also sometimes benefit from remortgaging if interest rates fall sharply during the term of your deal, as long as the savings available outweigh any early repayment charges

Other popular reasons to remortgage include:

  • To increase the amount borrowed. This could be, for example, to consolidate other debts or pay for home improvements

  • Because you’re unhappy with the level of service you’re receiving from your existing bank or building society

How to remortgage

Applying for a remortgage deal is a very similar process to applying for a mortgage to buy a house or flat. However, there are some differences. The main steps you need to take are as follows:

  1. Check the details of your existing mortgage deal. This includes the interest rate you are paying, the amount you pay each month, and whether you will need to pay any fees to switch.

  2. Use the MoneySuperMarket remortgage comparison service (and/or contact a mortgage broker) to see what deals are available. To do this, you’ll need to give us certain details, including:

    • Roughly how much your home is worth

    • How much you have left to pay on your current mortgage

    • When your mortgage is due to be paid off completely

    • Whether you would like to borrow more

    • What type of mortgage you'd like to switch to

  3. Contact the lender offering the best remortgage deal for you. Remember to consider all the related fees, as well as the headline interest rate. Then, complete an online application (or a mortgage in principle estimate if you’re worried about qualifying for the deal). To apply, you will usually need to provide various documents, including proof of earnings.

  4. Find a conveyancer or solicitor who can handle the mortgage transfer (unless you’re staying with the same lender, in which case this is not usually necessary). Then, wait for the lender to carry out the necessary checks on you and your property.

How soon can you remortgage?

You can remortgage to a new deal at any point, but you might face big charges if you’re still bound by 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.

Should I remortgage with my current provider?

Remortgaging to a new deal with the same lender is known as a product transfer. It’s often quicker than switching mortgage lenders and may involve fewer affordability checks. If you face early repayment charges for switching, your lender may also offer to waive these if you switch to another of its deals.

What are the costs involved in remortgaging?

The main costs involved in remortgaging to a new deal are:

  • Arrangement or product fee: Most attractive remortgage deals come with an arrangement fee of around £1,000

  • Booking fee: You’ll often also have to pay a booking fee of between £100 and £200

  • Valuation fee: Some lenders offer free valuations. But if not, you can expect to pay about £300 for a typical property

  • Legal fees: These may be covered by your new lender but will otherwise usually come to around £300

You’ll also often face an exit (or admin) fee to leave your existing mortgage deal, which could be up to £300. If you’re coming out of a deal early, you may also have to pay a big ERC. This could set you back thousands of pounds.

Do I need a solicitor to remortgage?

Since there is legal work involved when completing a remortgage, it is likely that you’ll need the help and service of a solicitor to guide you through the process. For instance, the solicitor will look after technicalities such as amending your contract, removing your existing provider, and registering your new mortgage lender.

Bear in mind that some lenders may include a legal package that will cover this as part of their remortgage deal. But one of the downsides to this option is that you won’t be able to choose which solicitor they use. If you decide to pick your own solicitor, you can have better visibility of the costs involved.

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

When you apply for a remortgage deal, banks generally conduct the same checks on you and your property as they would if you were applying for a mortgage to buy it. So, if your circumstances have changed since you took out your existing mortgage, this could have an impact on the sort of remortgage offers that are available to you.

For example, if you now owe a smaller percentage of your home’s value or have taken on a higher-paid job, you may well be able to qualify for cheaper remortgage deals.

However, if you’ve lost your job or your outgoings have increased, you might struggle to meet the affordability criteria set by mortgage lenders. That said, you may still be able to remortgage to a new deal with your existing lender.

Can I remortgage my home to purchase a rental property?

Yes. 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. This is especially true if there are any periods of time in which your rental property has no tenants, meaning that you have limited income to help cover the costs of repayments. Also, your new property may need repairs and refurbishments from time to time, so keep this in mind too.

Is there an age limit on remortgaging?

Legally, there is no age limit, but it’s down to each lender to set out their specific eligibility criteria. In fact, if you’re over 70 years old, you may find it a bit more challenging to find a deal that meets your needs.

That said, though, there are many options out there on the market that allow you to borrow money well into retirement. You can compare a number of deals with MoneySuperMarket and pick the one that best suits you and your pockets.

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:

  • Have built up a lot of equity in their homes (say at least 40% of the total value)

  • Have good credit scores

  • Have high/steady dispensable incomes

Therefore, ways to net a better deal include using savings to reduce the amount you need to borrow, taking steps to improve your credit score, and paying down any other debts – such as credit card balances – before applying.

You’ll also have to decide whether you want to take out a fixed-rate mortgage, a tracker mortgage, or a variable-rate mortgage. Our guide to different types of mortgages will help you make the right choice.

How to remortgage with MSM

It only takes a few minutes to find and compare remortgage deals from lots of banks and building societies with MoneySuperMarket.

Just answer six simple questions to see a list of the best mortgages we can find to suit your needs. You can also refine your search by answering further questions to see deals you’re likely to get, without wasting time or damaging your credit score with rejected applications.

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