Key takeaways
Remortgaging means switching your mortgage to a new deal, either with your current lender or a different one
Common reasons include reducing monthly payments, accessing better rates, or releasing equity from your property
Start looking for new deals 5-6 months before your current mortgage expires to avoid moving to a Standard Variable Rate
Early repayment charges and various fees mean remortgaging isn't always financially beneficial
You'll need a conveyancer when switching lenders, but not for a product transfer with your current lender
Thinking about remortgaging but not too sure whether it’s the right move for you? Or maybe you just need to know a little more about what the process is.
Well, needn’t worry, we cover it all here in our helpful guide to remortgaging.
Let’s get into it.
Put simply, remortgaging is when you switch your mortgage deal to a new one, this can be with the same lender or with a new one. It involves taking out a new mortgage loan and using the funds from that to pay off your existing mortgage.
Remortgaging is common, and people remortgage for different reasons. Whether it be to get a better deal, reduce monthly payments, release equity, consolidate debt, or something else, each situation and reasoning is unique.
Reduce monthly bills
For many of us, our monthly mortgage payments are our biggest outgoing every month, so it makes sense to try and get a cheaper deal. By switching, you can sometimes save hundreds.
Because remortgaging is a bit more hassle than changing car insurance, or utility bills provider, many stick with their same lender to reduce stress. However. if you look around the market, you could save by switching..+
Enhanced flexibility
Life brings surprises. A new job may have you eager to pay more towards your mortgage, only to find an overpayment limit holding you back. Or you may need the flexibility of payment holidays – temporarily stopping or reducing monthly payments if money gets tight.
We understand. Changes happen. There will always be mortgage deals out there that can accommodate your situation. If your current deal is more frustrating than flexible, it’s natural to think it’s time for a change.
Your home is worth more now
Home values shift over time. Yours may be worth more now than when you first took out your mortgage. Knowing your loan-to-value (LTV), which compares how much you still owe to your home’s current value, gives you important insight that can expand your options.
The lower your LTV, the more attractive remortgage deals available generally are. Whether your priority is decreasing monthly payments, funding home renovations by borrowing more against the equity you have in the property, or anything in between, remortgaging could provide the flexibility you’re after.
You want a better rate
Hearing others boasting better mortgage rates can make you feel like you’re missing out. There may be better options out there for you.
Remortgaging allows you to switch lenders and improve your current deal. If you’re still within your existing deal, early repayment fees could apply, be wary of this before agreeing on a new deal. In some cases, the long-term savings could outweigh this cost, but sometimes it’s better to wait for your deal to end.
Your deal is expiring
When your current mortgage deal expires, lenders typically move you to their Standard Variable Rate (SVR) if you do not agree to and sign a new deal. This baseline rate tends to be higher than promotional fixes lasting 2- 5 years.
You need to release some equity
Life presents financial needs at unexpected times. You may want extra cash to invest to fund your goals. However, your current lender may not allow you to tap into your home equity.
In those cases, remortgaging with a different provider could help. New lenders look more favourably on releasing funds if you share how you plan to use it.