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How to Remortgage Your Home

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Remortgaging is where you take out a new mortgage deal on a property you already own. It involves quite a bit of research and the ability to act fast, as many deals are only available for a limited time. Unsure where to start? Here’s some advice on how to remortgage your home.

How to remortgage a house

 Here’s a step-by-step on how it’s done:

  1. Assess current deal
  2. Work out if now’s the time
  3. Check credit score
  4. Compare deals
  5. Speak to your current lender
  6. Consider financial implication
  7. Get a mortgage in principle
  8. Get a conveyancer

What is a remortgage?

Remortgaging your home involves paying off your current loan; borrowing money against your property or signing up for another deal.

This means leaving the original fixed or variable rate and signing up for a new mortgage product that is (hopefully) less expensive and more suited to your current circumstances.

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Your home may be repossessed if you do not keep up repayments on your mortgage.

How long does it take to remortgage?

In terms of how long it takes to get a remortgage, you’re looking at between one and two months after you apply. Bear in mind that these 4 – 8 weeks can be delayed, for example, if there are issues with the mortgage valuation.

Why remortgage your home?

Many householders are opting to remortgage these days over moving home. There can be very low mortgage interest rates available and it could save you money. 

Every situation is individual, but let’s take a look at the common circumstances when it can be a good idea. 

If you can save money

One of the best reasons to remortgage is because it can save a considerable sum of money by reducing your monthly repayments.

Getting a better deal might be on the cards, however, you need to do your sums first. It’s not quite as simple as changing to a deal with lower interest rates. 

Some mortgage lenders may have expensive penalties for repaying your mortgage early (which is effectively what you’re doing when you opt to go with another finance lender). However, it can be worth it, particularly if you have a large sum of debt.

If you’re at the end of your current deal

The most common reason people cite when remortgaging is that they are approaching the end of their current mortgage term.

This could have been a fixed price deal for two years (for example) which is about to switch to the lender’s higher standard variable rate. This rate is subject to economic circumstances, so if the Bank of England raises its interest rate, the cost of your mortgage will rise accordingly as your lender follows suit.

If you want to release equity

Another reason to remortgage is to release some equity from the property, which has arisen as a result of it has increased value.

Remortgaging is quite common for those wishing to release funds to build a new extension, or add a conservatory. 

If your home’s value has increased

Many things can add value to your home, including certain improvements or even changes to the local area. It’s worth checking to see if your property is eligible for a lower loan to value (LTV) band and therefore lower rates. 

If you want to borrow more

One way to finance home improvement (for example) is to borrow against your property. Should your current lender refuse, you might be tempted to look elsewhere? 

Remember to take other forms of borrowing into account also, such as a homeowner or personal loan, as these could work out cheaper.

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If interest rates are set to rise

A rise in the Bank of England’s base rate might cause your monthly payments to increase, depending on what type of mortgage you have.

If you’re looking for more flexibility

Certain life changes, such as going back to education, a pregnancy, or a change of jobs can lead you to look for flexibility in your mortgage, such as payment holidays. A new deal might offer this, though it’s recommended to start your search early.

When shouldn’t you remortgage?

Remortgaging is a decision that needs careful consideration. Weigh up your individual circumstances and bear in mind that remortgaging might not be the best idea. 

If your early repayment charge is large

Should leaving your current deal not cost too much, it might be a no-brainer. However, a large early repayment charge isn’t something to be taken lightly and could render remortgaging a nonsensical financial decision.

An early redemption charge will usually apply when you have taken a deal for your existing mortgage, such as a fixed or discounted mortgage product.

They are usually a percentage of the total mortgage value and can easily run into thousands of pounds, so make sure you read the small print.

If your circumstances are unstable

Perhaps you’ve just moved jobs, or become self-employed, or you’re furloughed. Remortgaging works in much the same way as applying for a mortgage to buy a home; you’ll need to demonstrate a stable income and a bank of payslips. 

It might be worth waiting it out until you’re more settled.

If you’re in debt

The financial difficulty will make getting a mortgage much less likely. Things like outstanding debt or a poor credit rating can stand against you.

If your rate is a good one

The saying ‘if it ain’t broke don’t fix it’ applies here! A good deal with manageable monthly repayments is not to be sniffed at; you might not find something better elsewhere.

If your mortgage is small

Once your mortgage debt falls below a certain amount (e.g. £50,000), you’re less likely to make savings, particularly if other fees are high. Many lenders won’t even consider mortgages of below £25,000.

If you have little equity

You might be hard pushed to find a good deal if you need to borrow more than 90% of your home’s value. It’s always worth checking, but that’s the general rule. It could be a good idea to wait it out until house prices in your area rise again.

How to remortgage? 

Now you know why it can be a good idea, let’s take a look at how it’s done. 

#1 – Assess the current situation

Dig out old paperwork and assess your current mortgage deal, answering questions such as:

  1. What’s the interest rate?
  2. How long is left on your term?
  3. How much are your monthly repayments?
  4. What type of mortgage do you have?

#2 – Work out if now’s the time

Consider your current situation carefully, including your long-term plans and how long you want to remain on the property. Life events can play a significant role in this decision, so ensure you weigh things up. Look closely at the ‘here and now’ also, are you an attractive applicant for a loan?

#3 – Check your credit score

The administrative work for a remortgage is similar to the first time around; the new lender will carry out a credit check. So, check your credit score to see where you stand beforehand.

Check Your Credit Score

Your credit report will show details from the past 6 years, including credit cards and loans. If your score needs improving, it might be a good idea to do so before applying to remortgage. You can get a mortgage with bad credit, but it will be harder.

#4 – Compare deals 

Time to work out if remortgaging will save you money; speaking to a mortgage adviser is a good idea here. Shop around for deals, don’t just go with the first thing you see. 

#5 – Speak to your current lender

Before signing up with another lender for a remortgage deal, it’s worth running the new offer past your current lender to see if they can either match it or offer something better.

#6 – Consider the financial implication

A lender will likely want to see proof of earnings, employment, and credit history. They’ll also carry out a valuation of the property. Ensure this is something you can commit to, assessing your current circumstances. 

Work out how much you can afford to borrow using a mortgage calculator.

Mortgage Calculator

Your home may be repossessed if you do not keep up repayments on your mortgage.

#7 – Get a mortgage in principle

Should you wish to proceed, getting a mortgage in principle is the next step. Bear in mind this is not legally binding and your application could be rejected later down the line. 

#8 – Get a conveyancer 

If sticking with your current lender, a ‘product transfer’ shouldn’t require any further legal work. But, you might need a solicitor, if so, we can connect you with a member of our approved panel. Get a conveyancing quote below.

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How much does remortgaging cost?

The typical costs of remortgaging include:

Exit fee£50-£300
Early repayment charges3-5% (reducing each year of a 5-year fix)
New lender arrangement fee *if applicable*Around £1000
Valuation fees£250-£600
Legal fees£300 and up
Typical costs of remortgaging

This is why it’s essential to check you’re saving money in the long run, otherwise, it may not be worth it.

Need a mortgage quote?

Advice from a mortgage adviser can save you a lot of time and effort. They can explore your mortgage options and find the most appropriate deal for you. Their guidance could also help you avoid any potential pitfalls, such as expensive arrangements or valuation fees.

Our recommended mortgage advisers have a 5-star Trustpilot rating from over 5,000 reviews!

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Your home may be repossessed if you do not keep up repayments on your mortgage.

Last Updated: January 19th, 2024

Phil Spencer

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