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The option to remortgage can allow you to keep your mortgage costs as low as possible. That’s why it’s a good idea to check and compare the latest remortgage options if your existing deal has almost ended or has switched to your lender’s standard variable rate.
Alternatively, you may be thinking about remortgaging to raise cash, perhaps for a big purchase, home improvements or to pay off other debts. But whatever your reason for remortgaging, the overall aim should always be finding the best remortgage deal for your needs.
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Getting the best remortgage deal
Some of the steps you can take so you’re well-placed to get a good remortgage deal include:
- Improving your credit score: having a good credit score is usually important if you want to access the best remortgage deals.
- Lowering your loan-to-value: the lowest remortgage rates are usually available at the lowest loan-to-values when you’re borrowing smaller amounts.
- Comparing remortgage deals: shopping around is vital if you want to find the best remortgage deal for you.
- Securing a deal early: start checking your remortgage options well before your current deal ends and reserve one if you think it’s a good option.
» MORE: Best mortgage lenders
What does remortgage mean?
Remortgaging involves switching your existing mortgage to a new one. The new remortgage deal can be with your current provider or you can switch to a different lender. By remortgaging you may be able to get a better mortgage, switch to a mortgage better suited to your needs, or release funds from the equity built up in your property.
Why do people remortgage?
Some of the main reasons you may want to remortgage include:
- To save money by securing a lower rate of interest and a better all-round deal than you are currently on.
- To avoid going on to your lender’s standard variable rate (SVR) once the initial rate on your existing fixed-rate mortgage deal ends, because it may be higher than the rate you’ve been paying and it tends to be higher than the rate available on new remortgage deals.
- To release equity built up in your property to raise cash – for example, you may want to remortgage to pay for home improvements or buy a second home.
- To raise funds to pay off other loans – though choosing to remortgage for debt consolidation is not a decision to be taken lightly.
- To find a mortgage with certain features, such as one which allows you to overpay on your mortgage penalty-free or a flexible mortgage which may let you reduce your monthly repayments or take payment holidays.
- To take advantage of deals in a lower loan-to-value (LTV) bracket, which could offer lower rates, if the value of your property has increased or you’ve recently paid a lot off your mortgage.
- To change to a different type of mortgage, for example you may consider switching from a tracker mortgage to a fixed-rate mortgage if you’re worried about rates going up, or vice versa if you think rates will go down.
» MORE: Mortgage repayment calculator
When should I remortgage?
It’s usually a good idea to begin researching remortgage deals around six months before your existing deal is set to end. This is because most mortgage offers are valid for between three and six months, allowing you to secure a new deal while your current one is still running. By having your new mortgage ready to switch to when your current deal ends, you can avoid moving onto your lender’s standard variable rate, and the higher repayments this may result in.
The good thing is that you can usually reserve a new deal without having to fully commit to taking it out. So if a better deal appears in the meantime, you could opt for that instead. However you need to check if there are any fees involved with reserving a deal that you may not get back, or will still need paying, if you don’t eventually go with it.
» MORE: When can you remortgage?
Can I remortgage before my deal ends?
You can remortgage whenever you like, but early repayment charges are very likely to be payable if you want to leave your current deal while it still has time to run. It’s important to take these and other fees into account if you’re considering remortgaging early.
Finding the best remortgage deals
Taking the time to compare remortgage deals across several mortgage lenders will give you an idea of the rates and options available to you. Note as well that mortgage advisers often have access to remortgage deals that you can’t apply for directly.
Yes, the mortgage rate is important, but you’re trying to find the best remortgage deal that suits your needs all around. Take into account the various fees you must pay, and make sure the types of mortgage you’re looking at align with your situation and preferences.
If you’re unsure what you need in a remortgage deal, getting mortgage advice is a good idea – for example, you can get fee-free mortgage advice through our partnership with online mortgage broker London & Country Mortgages (L&C).
It also makes sense to check what your current lender can offer you. If you’re nearing the end of your initial rate deal period, your provider will get in touch in advance and explain the deals on offer. Ideally, start looking into your options around six months before you plan to remortgage.
If your current deal has no early repayment charges, you can regularly check the remortgage deals on offer to see if any suit your circumstances.
» MORE: Current mortgage rates
How do you remortgage?
The process of applying for a remortgage with a new lender is similar to applying for your original mortgage.
Start by getting a mortgage in principle from the lender you want to remortgage with. This will give you an idea of how much you may be allowed to borrow, usually without affecting your credit score, but it isn’t a definite promise that you’ll get a formal mortgage offer. It is also sometimes called an agreement or decision in principle.
A mortgage offer can only come after you’ve formally applied for the new mortgage, and if you pass a lender’s eligibility and affordability checks. You will need to share proof of your identity and address and recent financial information, such as payslips if you’re employed, and tax returns and your accounts if you’re self-employed. Bank and mortgage statements will also be needed and there’ll be questions about your income, outgoings and any outstanding debts you may have. The lender will run a hard credit check which has the potential to affect your credit rating and a property valuation will have to be carried out too.
If you’re remortgaging with the same lender you’re already with and not borrowing more, the process can be quicker, easier and involve less paperwork. You may not need another credit check or a property valuation, and you may not have to pay certain fees. But while this may sound appealing, it’s important to always compare remortgage deals across different lenders to make sure you’re not missing out on more suitable deals and better rates elsewhere.
» MORE: How remortgaging works
What information do I need to remortgage?
When preparing to remortgage you’ll need to know the following about your current mortgage:
- The mortgage rate you are paying
- Your current monthly repayments
- How much mortgage you have left to pay off
- How long is left on your mortgage term
- When any discounted or fixed-rate deal period ends and the mortgage rate you’d pay once it expires
- How much any early repayment charge would be if you’re remortgaging early.
You should be able to get all of this information from your current lender.
Remortgage costs and fees
Finding a lower mortgage rate is often a priority when remortgaging, but it’s important to consider the different remortgage fees that you’re likely to face too. Some of the main remortgage costs you may need to pay include:
Arrangement fees: Also often called a product or completion fee, this is charged by the lender to set up your remortgage deal.
Booking fees: These fees may need to be paid to reserve a remortgage deal while a lender assesses your application and are usually non-refundable.
Legal fees: You may need to pay legal fees for the work of a solicitor if you switch your mortgage to a different lender.
Valuation fees: The new lender you’re remortgaging to will need to know how much your property is worth before making you a mortgage offer, though sometimes a valuation will be free as part of the deal.
Admin fees: These usually cover the cost of tasks such as sending the deeds of your property to your new lender.
Early repayment charges: These may be payable to your current lender if you’re remortgaging to a new deal before your existing deal ends.
» MORE: Remortgage costs and fees explained
Remortgage FAQs
Remortgaging involves moving from one mortgage deal to another, either with a new provider or your current lender, to hopefully save you money or perhaps release funds from the equity held in your property.
Choosing to remortgage has the potential to lower your mortgage costs if you can find the right deal. However, it’s important to weigh up all the costs, including any potential early repayment charges. Remortgaging may not be worthwhile if you only have a small amount left to pay on your mortgage, or perhaps your circumstances have changed, making it harder to find a better deal. This may include if you’ve recently lost your job, your credit score is worse than when you took out your current mortgage, the value of your property has fallen significantly, or you’re in negative equity.
Mortgage rates are changing all the time. The best way to see the latest remortgage rates, and the remortgage deals offered by different lenders, is by regularly checking our mortgage rates page.
It may be possible to get a remortgage deal if you have a bad credit history, but you may find the mortgage rates you’re offered are higher than if your credit was good and you have fewer deals to choose from, and you may have to seek out a specialist lender. Taking the time to improve your credit score may give you access to more remortgage options and better rates.
If you’re looking to remortgage to release equity in your home, you will be increasing the size of your loan by asking the lender to add the amount you want to release to your current mortgage loan when you apply for a remortgage. Before going ahead, you should consider if there are other ways to raise the cash which may work out less expensive.
Not always. You won’t usually need to use a solicitor if you’re remortgaging with your current lender, but will if you’re switching to a new lender.
Generally, you’ll only be allowed to borrow as much as a lender thinks you’re able to comfortably pay back. How affordability is calculated can differ between lenders but the amount of equity you have relative to the value of your property, along with your income, expenditure, existing debt and credit score are all usually important.
You can expect it to usually take somewhere between four to eight weeks to remortgage with a new lender. Much depends on your circumstances, remortgaging needs, and the lender seeing everything it wants to see from you. If you’re remortgaging with your current lender on similar terms, the process is likely to be much faster, perhaps within 24 hours, and often in no more than seven days.
You can remortgage if you’re self-employed, it’s just that there may be a few extra hoops to jump through in terms of the paperwork you need to provide. Generally, the process for getting a self-employed mortgage will be the same for any other remortgage, except for when it comes to proving your income. So instead of providing payslips, you may be asked to share your last two or three HMRC tax year overviews, or other proof of earnings, such as self-assessment tax returns, SA302s, and certified accounts. Proof of your previous, current and upcoming work may also be required.
You can remortgage with the same lender or switch providers. The choice is yours, but comparing remortgage deals across as many lenders as possible will give you the best chance of securing the right deal for you.
If you’re remortgaging to a new lender, they will arrange a house valuation to check how much your property is worth. But if you’re remortgaging with your current lender, a new house valuation usually won’t be needed.
Your loan-to-value (LTV) ratio is the amount you need to borrow expressed as a percentage of the current value of your property. So to calculate the LTV on a remortgage, you divide the amount outstanding on your mortgage by the current value of your home, and multiply the number you get by 100. The more equity you have in your property when remortgaging, the lower your LTV, and the better the mortgage rates you may be able to get.
Seeking formal advice when remortgaging can help you find a remortgage deal that is suitable to you and your circumstances. It may also help you save money if a mortgage adviser can point you in the direction of deals you haven’t seen or can’t access directly. We’ve partnered with online mortgage broker London & Country Mortgages Ltd (L&C) who can offer you fee-free advice.
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