Remortgages Guide

What is remortgaging?

At the base of it, remortgaging is the process of moving your existing mortgage to another lender. This can be done for a variety of reasons and can be a benefit for many people.


The process of remortgaging does involve some upfront costs though so you may wish to calculate the potential savings before committing to one.

What does it mean to remortgage?

You can consider remortgaging any property you own, whether you have a current mortgage or already own your property outright. When you remortgage you switch away from your current mortgage to a new deal. You can do this through your existing lender or move to a new provider.

Remortgaging Guide

Why should I remortgage?

There are a variety of reasons people look to arrange a remortgage. Whether you want to cut your costs by moving to a more competitive rate or simply need to raise some extra cash, remortgaging can work for all kinds of purposes.

Cut your costs with a better rate

There are two options when changing your rate:

  1. Make a product transfer with your existing provider; this is when you swap the mortgage you have to another one without borrowing more cash.
  2. Swap to a new lender; your new lender will pay the capital owing to your old lender via your solicitor. You then continue to pay the new mortgage according to the terms of the agreement. These remortgages are usually limited to a maximum loan-to-value (LTV) of 90%, so you’ll need enough existing equity in the property or a 10% deposit ready.

As with any financial market, the mortgage business changes constantly. For more information and to see if a remortgage is a good move for you right now, get in touch and we’ll connect you with one of the expert whole-of-market remortgage brokers we work with.

Get cash by borrowing more money

If you want to remortgage to release equity from your property, the process is the same as a mortgage swap. The important difference being that the additional money you borrow is paid to you via your solicitor.

When you’re borrowing more money, most lenders will limit the loan-to-value (LTV) they’ll offer depending on what you intend to use the extra money for. This will affect the equity you will need to have to meet the lending criteria.

Is now a good time to do it?

At the time of writing, now is an exceptional time to consider remortgaging. In the aftermath of Brexit and the global turmoil created by the Coronavirus pandemic, interest rates are at their lowest level in history (0.1%). Many lenders are currently offering mortgage deals at super low levels which could make it a really good time to make a switch.

The stability offered by a low fixed rate might be a wise move as we are likely to enter a period of financial uncertainty.

It’s very important to remember that there’s no one-size-fits-all approach to financial advice. Whether remortgaging is right for you depends on your own individual circumstances, so seeking advice is vital.

To find out what kind of rates you might be able to get by remortgaging your property or to understand how much money you might be able to raise through remortgaging your property, speak to one of the mortgage brokers we work with.

As whole-of-market experts they are in constant touch with all the UK lenders and will be able to advise you of your options, taking full account of all the circumstances.

Is it a good way to pay off debts?

In the right circumstances, it definitely can be. Many of our customers remortgage to clear debts. With the right remortgage deal it’s possible to take your debts from expensive high rates and steep monthly repayments to much lower rates, spread over a longer term, resulting in far more manageable monthly outgoings.

The cost of remortgaging to pay off debts will depend on your specific situation, how long you wish to secure the debt, the type of mortgage you get and the interest rate you’re on.

By rolling up unsecured debts into a mortgage, the cost of paying them is likely to increase if the term of the mortgage is longer than that of the unsecured debt. It’s very important to factor this into your thought process and consider all other options.

Get in touch for a free, no-obligation chat and we’ll connect you with one of the remortgage experts we work with. They will be happy to answer your questions, and help you get a clear picture of all the costs involved. They will then be able to use their whole-of-market access to find a remortgage deal to suit your specific needs.

Is it easy to remortgage?

Remortgaging is usually very easy, especially compared with getting a mortgage to purchase a property. If you want to remortgage you simply need to find the mortgage you want, make your mortgage application, and your solicitor and lender will take care of the rest.

There’s no chain to worry about, no house to buy or sell, no contracts to exchange, fewer searches required (if any), and the general legal process of registering the charge with the new lender is far more simple too.

Although many remortgages will require a valuation, some lenders have automated services for properties at lower loan-to-value ratios and will remove the need if a property or deal is clearly a safe bet.

How quick is it to remortgage?

Compared to getting your original mortgage, remortgaging is usually much faster and easier to complete. From start to finish, a typical remortgage can take between four to six weeks. If your application is straightforward, you have a good credit record and your house is standard brick and mortar, it’s sometimes possible to get it sorted even faster.

Having all your documentation ready ahead of making your mortgage application can help speed the process up. Having an expert broker on your side might also make for a faster application, as they may have personal contacts on the inside who they can use to chivvy things along.

Get in touch to talk to one of the remortgage experts we work with and let them help you get a fast remortgage.

How much does it cost?

We all know there’s no such thing as a free lunch, and arranging a remortgage will come with various costs and fees. Before heading into a remortgage deal you should calculate how much it might cost to complete the exercise.

Costs you’ll need to take into consideration could include:

  • Arrangement fees; these are charged by the lender to establish your new mortgage, the amount will vary depending on the provider and the mortgage deal you’re applying for. They can be charged as a fixed amount or a percentage of the total sum you’re borrowing. You can either pay this fee upfront as a one-off cost or add it to your mortgage.
  • Booking fees; some lenders will make this charge on top of the arrangement fee and is usually a non-refundable, one-off upfront payment of between £100 and £200. Not all lenders will add this cost, but it’s worth finding out if it applies for the deal you’re interested in.
  • Legal fees; you’ll need to appoint a solicitor or conveyancer to sort out the legal side of your remortgage. Some lenders have remortgage deals which come with free legal work, or cashback to which many solicitors will match their fees.

The free legals/cashback normally only covers the basics involved with a remortgage. If there’s extra work involved for the solicitor such as settling other unsecured debts or removing a person’s name from the title deeds then there’ll be extra costs.

  • Valuation fees; not all remortgages require a valuation but if you’re moving to a new lender they want to get a valuation of your property before agreeing to the remortgage to be sure of the property’s market value. They will usually appoint their own valuer or surveyor but, unless the deal comes with a free valuation, the cost will be passed on to you. Valuation fees vary according to the size of the property but can be anywhere between £250 to £1,500.

We work with remortgage experts who can help you work out the costs associated with remortgaging and find the deal which makes sense for you, both in terms of upfront costs and long-term savings. Make an enquiry and we’ll match you with an expert for a free, no-obligation chat.

The other, sometimes more costly charges associated with remortgaging will depend on the current mortgage arrangement you have. Check with your current lender to find out if either of the following charges might apply:

  • Early repayment charges (ERCs); this is a fee you may need to pay if you want to exit your current mortgage deal before the end of the term. Early repayment charges won’t always apply, but they can be steep, so be sure to check your terms to see if there is one attached to your contract. It’s more likely to apply to fixed rate mortgages so if you’re on a variable rate mortgage you may have no early repayment charge.
  • Exit fees; also known as a mortgage completion fee, this is an administration cost applied by lenders when you pay off your mortgage in full – in this case due remortgaging with a new lender. Exit fees are also charged when you reach the end of your mortgage term and make your final mortgage payment.

What if I’m on a fixed rate?

If you’re on a fixed rate mortgage and tied in for a number of years, your lender will probably apply an early repayment charge if you leave your deal early. The charge can run into thousands of pounds and is often calculated as a percentage – charged at between 2-5% of the amount you have borrowed.

On top of the smaller exit fee which your current lender will also apply, it’s wise to make sure the sums stack up before throwing yourself into something which won’t end up paying off like you hoped. This is especially true if you have a large sum outstanding on your mortgage.

If you would like to get advice from an expert, make an enquiry and we’ll match you with one of the whole-of-market brokers we work with. They will be able to answer all your questions and help you understand all the costs which will apply, taking all your circumstances into account.

Can I do it before my current deal ends?

You can, but as mentioned above, be sure you have a clear idea of all the costs and charges involved in doing so. Once you know the sums you’ll be able to calculate whether remortgaging now or later is the better option.

If you would like to get bespoke advice from an expert, make an enquiry and we’ll match you with one of the whole-of-market brokers we work with. They will be able to answer all your questions and help you understand all the costs which will apply, taking all your circumstances into account.

Can I remortgage with the same lender?

Moving to a better rate with the same lender (and not borrowing any extra) is called a product transfer and, depending on your lender and the mortgage deal you’re on, should be perfectly possible. There are various advantages to doing this, including saving money on legal fees since there should be minimal legal paperwork involved.

As well as the potential to save money on legal fees, unless you’re borrowing extra money or making major changes to your mortgage, your lender may not need to carry out further affordability assessments or credit checks.

If your income has decreased, your expenses have increased, or you have become self-employed since you took out your original mortgage, this can make a product transfer a better option for you, but don’t rely on it. Some lenders might require updated details on your circumstances regardless of the information they already have on file.

A product transfer makes sense if it helps you avoid having to pay early repayment charges which you’re more likely to be hit by when switching to a new lender. You would also avoid paying any exit fees when terminating your existing mortgage.

When should I go to a different lender?

Remortgaging with a different lender gives you a greater opportunity of finding a better deal as your selection isn’t limited to what your current lender offers. The more equity you have in your home and the cleaner your credit, the lower the rate you should be able to get with your remortgage. Over the course of a mortgage term you could potentially save thousands of pounds.

Many lenders advertise competitive rates to attract remortgagers and will also offer incentives, such as free valuations and legal work.

Remortgaging with a different lender might also be a way to pay off a substantial chunk of your mortgage without incurring any overpayment fees which your current lender might charge.

How do I apply for a remortgage?

There are usually four steps involved in making a remortgage application:

  1. Establish your loan-to-value (LTV)
    Before you start the remortgage process, calculate how much you want to borrow. Add the amount of enquiry you hold in your current property to any additional borrowing you need and work out what your house is worth (if you have no idea, visit Zoopla or mouseprice).
    Next, divide the loan value by the house value and multiply by 100. For example:
    75k (loan) / 100k house x 100 = 75%
  2. Ensure you meet the affordability criteria
    Lenders have different lending rules and each takes different income into account when calculating your affordability. To work out how much you might be able to borrow, calculate your total annual income, subtract your annual outgoings, and then multiply by 4.5. This will give you an approximate maximum loan a lender may be willing to offer you (although some lenders go up to 5x your income and a minority x6).
  3. Decide what type of mortgage you want
    Knowing whether you want to remortgage on to a fixed rate or tracker rate on a repayment or interest-only mortgage will help ensure you find the right remortgage deal.
  4. Find the best deal
    Using the LTV you worked out in step 1, search for products that you’re eligible for, or get a whole-of-market remortgage broker to do the legwork on your behalf.
    A whole-of-market expert can help you find the right deal, saving you time, hassle and a heap of potential headaches.
    You may have to pay for a broker but it’s almost always worth it because, by saving money on your payments, the advice can end up paying for itself within a few months of cheaper mortgage payments.

Do I need a deposit?

You don’t need a deposit for a remortgage as you can use the equity you have in your home. If you wanted to get a cheaper mortgage, using a deposit to add to the equity you already own is an option and this will lead to you needing a smaller mortgage.

What documents will I need?

Most lenders will want to see the following documents when you apply:

  • Photo ID (usually a passport or driving license)
  • Proof of address (utility bills, credit card statements etc)
  • Bank statements for the last three months
  • Your last three wage slips
  • Accounts for the last three years, if you’re looking for a self-employed mortgage (although some lenders will accept as few as 9 months)
  • Proof of any bonuses/commission
  • A copy of your latest P60

Some of the mainstream mortgage providers may insist on hard copies of the above, although printed copies of online bank statements should be acceptable. Sending all of the required documents in one go might help speed up the application process.

Will I need a valuation?

Most lenders will instruct their own surveyor or valuer to value your property as part of the remortgage process. The valuation gives the lender a clear understanding of the value of your property. This will be used to calculate your loan to value, which helps the lender decide the deal they are able to offer you.

Can I apply online?

Mortgage and remortgage applications are often carried out almost entirely online these days and there’s little reason why this shouldn’t be the case for you. As mentioned above, some lenders will need to see hard copies of some of the documentation they require, and should be mailed as per the instructions which will be made clear as you proceed.

Can I get an interest-only remortgage?

Yes, depending on your circumstances and the loan-to-value you’re looking for it may be possible. Interest-only mortgages are harder to secure than repayment mortgages because following the 2007 credit crisis, many homeowners reached the end of their mortgage term without means to repay their loan. This forced the government to step in and introduce strict rules on interest-only lending.

As a result, you have to prove that you have a repayment vehicle in place. It’s no longer possible for you to say you’ll overpay or downsize before the end of the term.

While some providers have stopped interest-only lending altogether, most lenders who do offer interest-only remortgages will restrict loans to 75% loan-to-value, and some will only go as high as 50%.

Will remortgaging affect my credit score?

Remortgaging might actually be a great way to help rebuild your credit history. By using a remortgage to consolidate multiple debts, you may find it easier to keep track of your repayments. It’s also a good way to show your current, and future, lender that you are able to handle your debts responsibly.

You could even save money because interest on a mortgage is usually charged at far lower rates than you will find with personal loans or credit cards.

What if I’ve been declined in the past?

Don’t despair, if you’ve been declined for a remortgage there are steps you can still take to secure a deal:

  1. Take note of why the lender turned down your application, if they don’t give you a reason, ask them to tell you. It could be because of your credit history or affordability, but knowing the specifics will help you find a deal which will work.
  2. Make an enquiry and chat things through with one of the whole-of-market brokers we work with. Explain what kind of remortgage you’re looking for and the reason you were declined previously.
  3. Sit back and let them search the entire market on your behalf for the lender who is best positioned to help you out where others couldn’t.

Going about things this way could help prevent your credit rating being negatively affected, as approaching several different lenders could leave an unnecessary trail of black marks on your file.

Finding a remortgage specialist who is expert in arranging the type of mortgage you’re looking for is important. Get in touch and we’ll match you with a broker who has helped customers in similar circumstances.

Get in touch to see how we can help 

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