Remortgages

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What does remortgage mean?

A remortgage means that you switch to a new mortgage with a new lender, or to a different mortgage with the same provider.

You’ll probably want to remortgage when you reach the end of a promotional fixed rate or tracker rate deal so that you don’t end up paying your lender’s standard variable rate of interest, which is likely to be more expensive.

remortgages

Why remortgage?

While saving money is the main reason to remortgage, you could also decide to remortgage if you want:

  • The security of a fixed-rate
  • To pay off a mortgage earlier
  • To borrow more
  • To consolidate other debts
  • A different type of mortgage, such as one with greater flexibility
The average loan size for those remortgaging was £145,950 in July 2021

According to conveyancing firm, CLS

How to remortgage

To get started, put in a few details about you and your income to find mortgages you’re more likely to be approved for.

The lenders available to you will depend on:

  • Your credit history. There’ll be an affordability check, so view your credit report to check your credit score first
  • The value of your property
  • Whether you’re over 60, retired or self-employed. It might be more difficult for you to get a mortgage if any of these apply

You’ll need to consider additional costs, like legal, administration and property valuation fees.

Talk to a mortgage adviser to get tailored advice. If you’re happy, they can take your application forward with your chosen lender.

Remortgage costs

If you decide to remortgage, you’ll have to pay these fees during the process:

  1. Broker and advice fees

    Some brokers will charge if you choose to take mortgage advice – but fee-free advisers are available [1]

  2. Remortgage fees

    The amount you pay your new lender to set up your remortgage

  3. Property valuation

    What you pay your new lender to evaluate your property’s worth

  4. Early repayment charges

    If you leave before your contract period finishes, your existing lender will charge you a percentage of your current mortgage

  5. Admin fees

    This is what you pay your existing lender for forwarding on your title deeds to your solicitor, but not all lenders charge it

  6. Legal fees

    This is paid to your solicitor to cover the cost of the legal work required to remortgage

Types of mortgage

Most people in the UK have a repayment mortgage, but it’s not the only option when you’re looking to remortgage:

Repayment mortgages 

With a repayment mortgage, you pay off the interest and borrowed amount (capital) each month for a fixed term.

Repayment mortgages will either have a fixed rate, where the monthly repayments are a fixed price for a certain time. Or it’ll be a variable rate, so your monthly repayments may go up and down.

Interest only mortgages

You repay the interest on your mortgage for a fixed term. You’ll be responsible for repaying the borrowed capital at the end of the term.

Offset mortgages

Offset mortgages are quite rare. They work by deducting the amount of money in your savings account from the amount you pay interest on, so your monthly repayments are lower.

Frequently asked questions 

  • You can begin looking around 14 weeks before your current mortgage ends.

    You can also remortgage if you’re in the middle of your current deal or if you’re moving house but you’ll need to consider early repayment charges, which can be expensive.

  • Remortgaging is usually cheaper monthly than a personal loan. This is because most personal loans have a maximum term of 60 months. However, a mortgage term can be much longer, allowing you to spread the cost of your borrowing.

    What works for you depends on your circumstances though, so it’s best to seek independent professional advice before committing.

  • You’ll usually need a new valuation if you’re changing lender. You won’t always need a valuation if you’re staying with your current lender, as long as they’re still happy to accept the previous valuation.

  • Remortgaging is usually quicker than the mortgage process you go through when you buy your home in the first place. It can take less than a day if you’re staying with your existing lender and not borrowing any more.  

    But if your current deal is coming to an end and you’re thinking of switching, make sure you start looking for your new mortgage three-six months before your current one ends.

    Most lenders allow you to apply and secure a rate for three to six months before you complete.

    So that way, you’ll be able to switch straight to the new lender, without a few months of paying at the (usually higher) standard variable rate. 

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

[1]For online mortgage comparison and advice Gocompare.com introduces customers to Koodoo which is the trading name of Mortgage Power Limited who are authorised and regulated by the Financial Conduct Authority (FRN 845978). Gocompare.com’s relationship with Koodoo is limited to that of a business partnership, no common ownership or control exists between us. Please note, we cannot be held responsible for the content of external websites and by using the links stated to access these separate websites you will be subject to the terms of use applying to those sites.