Remortgage

What is a remortgage?

A remortgage is when you take out a new mortgage deal on a property you already own. This might be to replace an existing mortgage or to borrow additional money against the property.

You may be looking to remortgage for several reasons - you could be coming to the end of the initial rate on your current mortgage and want to move to a different deal with your existing lender. Or you might be looking to switch your mortgage to a new lender.

In both of these situations, the aim is usually to avoid going on to your existing lenders’ standard variable rate (SVR) so you can make savings. This is because most lenders’ SVRs are higher than the initial rate that comes with a new mortgage.

Other reasons to remortgage could include if you’re looking to borrow more on your mortgage to free up some cash for a home renovation or extension, or to help pay off some debts.

Whatever your motivation, remortgaging can be a great way of finding better mortgage terms or getting better interest rates and ultimately saving money on your mortgage payments.

How do remortgages work?

Simply put, remortgages switch your current mortgage deal to a new one. You’ll use your existing property as security just as you did with your original mortgage deal. If you’re looking to move home and want to take your current mortgage deal with you, take a look at how to port your mortgage.

How much can I borrow with a remortgage?

Lenders will only lend you as much as they believe you’ll be able to pay back.

They work this out by looking into your financial situation - taking into account your income, expenses and your credit history to get the best idea of how much to lend you and how much you’re borrowing relative to the value of your property.

What are the costs and fees of remortgaging?

The cost of remortgaging largely comes down to the interest rate that’s set by your chosen lender. Lenders offer a number of different rates but the rate you get is decided by things like your personal financial situation, credit history and your home’s loan-to-value rate (LTV).

Some of the fees that typically come up during the remortgaging process include:

• A property valuation
• Arrangement fees
• Admin fees
• Legal fees
• Early repayment fees

A property valuation is often part of the remortgaging process. This is so the lender can decide if your home is worth the amount you’re looking to remortgage for.

Arrangement fees is the fee for the mortgage product. Sometimes known as the product fee, it can cost up to a couple of thousand pounds. Some lenders may let you add the fee to the mortgage amount.

Admin fees may be charged to you by the lender for the cost of setting up your remortgage deal.

Legal fees might come up if you need to pay for a solicitor to take care of the legal side of things. This could be if you’re looking to switch and remortgage with a different lender.

Early repayment fees are normally charged if you change mortgage products before the end of the introductory period. The bulk of charges will be taken up by this kind of fee.

Exit fees may have to be paid if your existing mortgage deal hasn’t come to the end of its term yet and you’re ending it early. Depending on your mortgage deal, you might still make savings by remortgaging, even if there are exit fees.

Some lenders may offer free fees with a remortgage deal, but it’s important to take into account all fees when working out if you’ll save money overall with a new deal.

When you compare with our mortgages partner Koodoo, you'll be able to view deals from multiple lenders. Alongside each deal they clearly show the total cost of the initial period so it’s easy to compare different deals. If you need more detail, you can also view and compare account rates, fees and incentives for each deal