What is a remortgage?
A remortgage is when you switch your current mortgage deal to a new one. This could be to replace an existing mortgage or borrow additional money against the property.
Whatever your motivation, remortgaging can be a great way to find better mortgage terms or get better interest rates and ultimately save money on your mortgage payments. If you want to move home and take your current mortgage deal with you, take a look at how to port your mortgage.
Why should I remortgage?
There are many reasons why you might want to remortgage:
- Your current mortgage deal is coming to an end
- Your variable rate mortgage has a high interest rate
- You're not happy with your current lender
- You want to start mortgage overpayments
- The value of your property has increased
- You'd like to borrow more on your mortgage
Your current mortgage deal is coming to an end so you'll be moved to the lender's standard variable rate (SVR). This rate is usually higher than your fixed rate deal. By remortgaging, you could find a new deal with a better interest rate.
Your variable rate mortgage has a high interest rate and a rise in the Bank of England's base rate could increase your mortgage payments. You could find a more competitive deal by remortgaging.
You're not happy with your current lender or with the level of service you're receiving. If you don't remortgage with your current lender you can switch to a different one.
You'd like to start mortgage overpayments but your current deal restricts or doesn't allow them. You could find a remortgage deal that lets you start or increase your overpayments.
The value of your property has increased, and you want to see if you now qualify for better interest rates. If you're lucky enough to own a property that has increased in value, your new lower loan-to-value (LTV) could help you when applying for better interest rates when you remortgage.
You'd like to borrow more on your mortgage to get a lump sum to help consolidate debts, make home improvements or for something else. You can remortgage to release equity from your property. If you're over 50 years old, you may be eligible for equity release.
What are the costs and fees of remortgaging?
The cost of remortgaging mostly depends on the interest rate that's set by your chosen lender, which can vary. But the rate you get is decided by things like your personal financial situation, your 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
- An arrangement fee
- 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 want to remortgage for.
An arrangement fee, or product fee, is the fee for the mortgage product. 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 setting up your remortgage deal.
Legal fees if you need to pay for a solicitor to take care of the legal side of things. For example, 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. Most of the charges will be taken up by this kind of fee.
Lenders may offer some free fees with a remortgage deal, but it's important to take into account all the fees when working out if you'll save money overall with a new deal.
What types of remortgage deals can I take out?
Finding a remortgage deal is very similar to taking out your first mortgage. The most common types are:
- Fixed-rate mortgage
- Tracker deal mortgage
- Capped rate mortgage
- Discounted mortgage
- Offset mortgage
A fixed-rate mortgage has a fixed interest rate for a set amount of time, typically between 2 and 10 years. So you'll know exactly how much your mortgage payments will be every month.
A tracker deal mortgage has variable rates that track the Bank of England’s base rate at a set rate just above theirs. Your payments rise and fall depending on how high or low the base rate is each month.
A capped rate mortgage is like a variable rate mortgage, but with a fixed upper rate limit. You'll know in advance how high the rate can go, helping you avoid high, unaffordable payments.
A discounted mortgage is another type of variable mortgage, but it offers a discounted rate on the lender’s Standard Variable Rate (SVR) throughout the initial period. The interest rate would be a set percentage of the lender’s SVR.
An offset mortgage is a type of mortgage that can help reduce the interest you pay by offsetting your savings against the remaining amount of your mortgage.
For a more detailed look at the different types of mortgages, our guide to mortgage types should help.
What our expert says
With the recent interest rate rises, exploring your options and avoiding your lenders standard rate has never been more important.
If your current mortgage deal is coming to an end, or even if it isn't, it’s a no-brainer to see what other offers are available, especially if they’re better than what your current mortgage lender is offering.
Louise Thomas
Personal finance expert
Need more help?
How does the loan-to-value rate of my home affect remortgaging?
Different lenders may have different rates of interest, depending on how much of the value of the property you want as a loan.
Should I revalue my house before I remortgage?
You should only revalue your property if you’re changing mortgage lender. If you’re staying with your current lender, there’ll be no need for a valuation.
If you’re looking to borrow more against the value of your home, you might want to get it revalued to see if it’s increased in value.
Is there an age limit on remortgaging?
Different mortgage lenders will have different age limits, so it’s best to check with yours first if you want to remortgage.
Some may have an age limit for starting a mortgage and others for when the mortgage term comes to an end.
But the most important consideration for remortgaging is if your income is high enough to cover the monthly payments, just like with your first mortgage.
How long does a remortgage take?
Remortgaging your home is usually faster than buying your first property. It could be even faster if you’re staying with your current lender and you’re not looking to borrow extra.
If you’re switching to a new deal, be sure to start the remortgaging process early enough to move straight to your new deal. This means you won’t switch to your lender’s SVR – which is typically more expensive – when your current mortgage term runs out. As a rough guide, start looking about 14 weeks before your rate is due to end.
How can I improve my chances of being accepted for a remortgage?
If you choose to stay with your current lender, there usually won’t be any additional checks to be accepted for a new deal. To improve your chances of being accepted to remortgage with a different lender, you should:
- Pay your bills on time
- Check your credit report for any mistakes
- Make sure you're on the electoral register
- Avoid getting into debt or borrowing more than you can afford
Can I remortgage with bad credit?
Yes, but there are a number of things to bear in mind.
If you have a bad credit score, lenders will be warier of advancing you money, as your financial history suggests you're a higher-risk customer. While you should be able to take out a remortgage, you’re unlikely to qualify for the most competitive rates on the market.
Consider remortgaging with your current provider if you don't want to increase the amount of money you’re borrowing and just want a new deal on the same terms. It’s unlikely your existing lender will do a further credit check on you. So you might get a better deal than you would with a new lender.
Can you remortgage in a fixed term?
Yes you can, but it might not be sensible to do so.
The whole point of a fixed term is that you get a lower rate while the lender has your guaranteed business for the set period.
So you’re likely to face a high early repayment charge if you leave your fixed-rate deal early. The charge might be smaller if you’re close to the end of the fixed term, but it could cancel out the savings you made by fixing in the first place. This could make you worse off.
How soon can you remortgage before a fixed rate ends?
Most lenders let you set up remortgages between 3 and 6 months before your current deal ends.
This gives you time to search for the best deal. Once you’ve booked it, you know that you’ll automatically switch to the new deal when your current one expires.
Can I remortgage my house to buy another property?
Yes, but you’ll have to prove to a mortgage lender that you can afford to do so.
People usually do this to join the buy-to-let market.
But as with all remortgages, the amount you can borrow and the rate you’ll be offered depends on how much you can afford.
And if you’ve still got some of your original mortgage to pay off, the repayments for your remortgage deal will be higher than you’re paying at the moment.
Can I remortgage if I'm self-employed?
Yes. Remortgaging is possible if you’re self-employed but it may be a bit more difficult.
Lenders want to be certain that you’ll be able to make your repayments on time, so they want to see proof of income.
They'll want to see at least 3 years of financial records, so you’ll have to get these ready
Being self-employed means your income can fluctuate, and if your recent income has been low, it might not look good to lenders.
But if you have a history of reliable income and plenty of future work coming your way, let potential lenders see these details, too.
Having a good credit history with a track record of making repayments on time, can also also help.
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