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You can easily compare deals from our panel of leading lenders before making your final decision
1Monthly saving based on re-mortgaging £204,690.00 from the highest Big 6 Lender Standard Variable Rate at 5.24% to a 5 year fixed rate of 3.35%, LTV 48.8%, less fees (£995), details correct as of 1st September 2022.
Your home may be repossessed if you do not keep up repayments on your mortgage.
A remortgage is a change of the mortgage deal on your property. This could mean switching it to a new lender or moving to a different rate with your existing lender. It can be a good way to find lower interest rates and better mortgage terms.
When your current mortgage deal ends, you’ll be put on your provider’s standard variable rate (SVR), which tends to be higher. Remortgaging can move you on to a lower interest rate
If you’re on a variable rate mortgage, a rise in the Bank of England base rate can increase your mortgage payments. If you remortgage, you could find a more competitive deal
You can release equity from your property when you remortgage to pay for home improvements or paying off other debts
You may want to remortgage to find a provider with more flexible terms that lets you overpay on your mortgage without penalty
If your property value has increased, your lower loan-to-value might help you qualify for better interest rates
If you have built up some cash savings, or perhaps had an inheritance or windfall, you can use this money to offset against your mortgage debt with an offset deal
The cost of a remortgage depends on the amount you need to borrow, the type of mortgage – repayment or interest-only, for example – the interest rate you agree to pay, how many years the loan is spread over (known as the term of the loan), and the fees you are charged when setting it up.
Our mortgage calculator can help you get a better idea of how much your mortgage will cost you in monthly repayments, as well as how much you can afford to borrow. You’ll also be able to see the total cost of your mortgage once the interest has been added.
Having a good credit score will allow you to get the best advertised rates from mortgage lenders
Compare deals by the lowest rate. Consider fixed and tracker deals to see which might suit your attitude to risk
If you can borrow a lower percentage of the property’s value, you can often find cheaper remortgage deals
Administration, legal, and valuation fees on a remortgage can offset a low interest rate – so a deal may not be as good as it first appears
You can easily compare deals from our panel of leading lenders before making your final decision
This will help us find the most relevant deals for you, including only products you are likely to be accepted for
These will show your potential monthly repayments, the interest rate you’ll pay and the cost of any product fees
While it is useful to keep tabs on your mortgage to see if there are cheaper alternatives, the best time to focus on remortgaging is around three to six months before your current deal is about to expire.
This gives you time to find a better deal and make sure you have it in place to avoid reverting to your existing lender’s SVR, which could leave you paying more in repayments than you need. Lenders will also issue remortgage offers that last from three to six months, so unless your financial situation changes, any offer you receive during this period should stay valid until your current deal concludes.
Although early repayment charges often mean it’s too expensive to remortgage before your current deal ends, you could face a situation where you’re better off or need to remortgage anyway.
For example, the value of any new deal may counteract the early repayment fees, interest rates surge may mean you need to find a way to reduce monthly repayments, or you may simply need additional borrowing for reasons such as paying for home renovations.
Typically, a remortgage will take around four to eight weeks from application. However, this will depend on a number of factors, such as whether you are looking for a like-for-like deal or if you want to increase the amount you borrow.
If you are just looking for a better deal for your existing property and your affordability hasn’t changed – or has improved – you are well placed for the deal to progress quickly.
Yes, but it will depend on the terms and conditions of your existing mortgage – and may work out as more expensive. Many mortgages have early repayment charge, which can mean it’s cost-prohibitive to remortgage before the end of the introductory period.
But even if you’re locked into a deal, you don’t have to wait before looking at alternatives. From three to six months before the deal expires, you can have a remortgage in place ready to go.
Yes, you’re free to remortgage with a different lender if you wish. You don’t have to use your current lender, but you may have to pay a penalty if you’re still on your initial deal. However, if your mortgage has ended or is about to expire, you can opt for another lender with no extra fees.
Yes, you should be able to remortgage if you’re self-employed. Bear in mind, though, that the process may be a bit more difficult, as lenders could find it more challenging to assess your incomes and financial situation. You can boost your chances of taking out a new mortgage by showing:
A good credit score – this will act as evidence that you can manage your finances and have a good history of paying your bills on time.
Proof of income – generally, you will need to provide at least three years of financial records, which will then need to be undersigned by an accountant. You could also show evidence of your earnings on an SA302 tax calculation form.
Healthy workflow – to prove present and future flow of income, you can show your lender both a healthy client list and an agenda of any current or upcoming jobs.
Use of a solicitor is not necessary, but it can take the worry out of making sure that the deeds of the mortgage are safely transferred to the new lender. Fortunately, most remortgages include a free legal package, so your lender will take on the cost of the solicitor.
Remortgaging is also generally more straightforward than a new mortgage, so any costs incurred should be lower.
It depends on your circumstances. Usually, you will need a new house valuation if you decide to change lender. If you’re staying with your current lender, however, there is a chance you won’t need a new valuation. Make sure to check with them whether it’s required or not.
Remortgaging to release equity means borrowing more than with your existing mortgage. If you’re nearing the end of your current deal, you could look to remortgage for a larger amount, but this will depend on your affordability and what percentage of the property’s value you are looking to borrow. If you can’t or don’t want to change your initial mortgage, alternatives include taking out a second mortgage on the property.
Remortgaging happens when you change the mortgage you currently have on your property, either by switching it to a new lender or by moving to a different deal with your existing lender.
Your lender will ask you to gather a few documents to complete a remortgage. These might include:
Your last three months' bank statement
Your last three months' pay slips
Your last two to three years' accounts/tax returns if self-employed
Your latest P60 tax form (showing income and tax paid from each tax year)
Passport or driving licence
Proof of address, through utility/council tax bills
The main cost of your remortgage will be decided by the interest rate your lender sets. They’ll usually decide this by considering your loan-to-value ratio and credit history.
You should always factor in the fees you’ll need to pay before remortgaging, which can include:
Arrangement fees: Most mortgages have arrangement fees which range from around £100 up to a couple of thousand pounds. Mortgage deals with the keenest rates tend to have the highest fees.
Legal fees: You might have to pay for a solicitor to take care of any legal matters if you’re looking to remortgage with a different lender.
Admin fees: The lender might charge for the cost of setting up your remortgage.
Valuation: You’ll need to have your property valued so the lender can see its current market value – to check the loan-to-value ratio of the mortgage is correct.
It depends on the mortgage provider, as each lender will have their own specific policies and age limits. Therefore, it is wise to get in touch and check with any provider that you’re considering. Some lenders may have a maximum age for starting a mortgage, whereas others could have a maximum age for when the deal ends.
Other mortgage types to consider
Other mortgage types you might want to consider if you’re looking to remortgage include:
Capped-rate mortgage: a capped-rate mortgage is a variable-rate mortgage, but there is a limit to how high the rate can go. This can be useful if you want a variable-rate mortgage, while avoiding unaffordable payments if the rate rises
Discounted mortgage: a discounted mortgage is another type of variable-rate mortgage. This offers a discounted rate on the lender’s standard variable rate for a certain period of time
Offset mortgage: an offset mortgage helps to reduce the overall interest you pay by offsetting your savings against the outstanding balance of your mortgage. But this means you won’t be gaining any interest on your savings during the deal
Fixed-rate mortgages have an interest rate that stays the same for a set period. This could be anything from two to ten years. Your repayments are the same every month and you don't need to fear fluctuations in interest rates.
If you choose to leave the deal before the end of the fixed term, most will charge you a penalty. This is known as an (ERC).
Interest rates adjust periodically with a variable-rate mortgage, which means repayments may change throughout the loan term. Usually, the interest rate changes in relation to the Bank of England's base rate. This is very influential on variable interest rates, as is the base rate of each lender.
For standard variable-rate (SVR) mortgages, each lender has a SVR that they can move when they like. In reality, this tends to roughly follow the Bank of England's base rate movements. SVRs can be anything from two to five percentage points above the base rate (or higher). They can also vary massively between lenders.
The other type of variable mortgage is a discount mortgage. Rather than being linked to the Bank of England base rate, discounts are linked to the lender's standard variable rate (SVR). For example, if the SVR is 4.50% with a discount of 1%, the payable mortgage rate is 3.50%. If the SVR rose to 5.50%, the pay rate would rise to 4.50%.
The problem with discounts is that SVR changes are at the lender's discretion. So, your mortgage payments could change even if there has been no alteration in the Bank of England base rate. What's more, even if the SVR changes following a move in the base rate, there is no guarantee that it will increase or decrease by the same amount.
As a result, trackers are usually seen as more transparent than discounted deals. They are also often seen as being fairer for the borrower.
For example, when the base rate fell from 5.00% to 0.50% between October 2008 and March 2009, Lloyds TSB was the only top-20 lender to reduce its SVR by the full 4.50%. All the others cut their rates by less.
When the Bank of England raised the base rate from 0.25% to 0.5% in November 2017, anyone who wasn’t on a fixed-rate mortgage was at risk of seeing their repayments increase. A number of leading mortgage lenders followed and increased their tracker and/or SVR rates a month later.
Most mortgage deals carry arrangement fees, which can vary from a few hundred pounds up to a couple of thousand.
Also bear in mind that these set up costs can sometimes be made up of two fees. Lenders may charge a non-refundable booking fee, which is effectively a product reservation fee. If your remortgage falls through and you don’t end up taking the mortgage deal, you won’t get this fee back.
The second type of fee is an arrangement fee which you pay on completion of the mortgage, so you won't have to pay it if, for any reason, you don't take the mortgage.
Calculate how early you could pay off your mortgage. But make sure you read our mortgage overpayment guide first, as overpaying isn’t the right move for all homeowners.
Remember to always factor additional fees into the overall cost of any deal. Even if a lender is offering a seemingly unbeatable rate, steep fees could mean that it actually works out to be more cost-effective to opt for a higher rate with much lower fees or no fee at all.
The best remortgage rate for you depends on how much you are looking to borrow. A high fee is often worth paying in order to secure a low interest rate if you are applying for a large mortgage. But those with smaller mortgages could be better off opting for a higher rate and lower fee.
However, while this is the general rule, you need to work out the total cost over the term of the deal. For example, if you are going for a two-year fixed rate, you need to work out the cost of your repayments over the term. You can do this by finding out what the monthly payment will be using our mortgage calculator – and then multiplying by 24. You then need to add on the arrangement fee to find out the total cost.
You will likely find that you have more mortgage deals to choose from if you have a good credit history, so it’s worth making sure that your credit report is as good as it can be before applying for a remortgage. Paying off any outstanding borrowed credit you owe and making sure your current address is on the electoral roll can help to improve your credit score.
The more money you can save as a deposit, the less you’ll need to borrow as a mortgage loan. What’s more, having a bigger deposit can help you get access to more competitive mortgage rates.
Lenders will often have a maximum ratio they’re prepared to offer you. Instead, the rest will need to be made up with either a deposit or an equity loan like the government's Help to Buy equity loan scheme.
Using a mortgage comparison tool can give you a better idea of how much you’d need to pay in monthly costs and interest, the duration of the deal, the maximum LTV, and any product fees you may need to pay for the remortgage deals available based on your borrowing requirements.
It’s important to remember that the mortgage deals you’re offered when you go to make an application may differ because they will then be influenced by your financial situation and credit history.
Get free mortgage advice and see deals from the whole of the market with broker London & Country. Call free from your landline or mobile on 0800 170 1943 any day. Read more about London & Country
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