Remortgaging to a new deal could be a brilliant way to save money. Whether you’re looking to get a better fixed rate, or planning ahead for when your current deal ends, it’s worth knowing that you can remortgage at any time.

If you remortgage your home, you might be able to avoid higher standard variable rates (SVR) once your existing mortgage deal is finished. Here are a few things you should know before you get started. 

Remortgaging your home can be a strategic move to manage your finances more effectively. Whether aiming to secure a better interest rate, release equity, or adjust your mortgage terms, understanding the remortgaging process is crucial.

This guide provides comprehensive insights into remortgaging, helping you navigate the process with confidence.

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What is Remortgaging?

Remortgaging involves replacing your existing mortgage with a new one, either with your current lender or a different one. This process doesn't entail moving home or taking out a second mortgage; instead, it's about securing terms that better suit your current financial situation.

There may be some costs involved, but the overall aim is to help you save money. You can achieve this by finding more favourable terms or negotiating a lower interest rate with your new provider.

Why Consider Remortgaging?

There are many valid reasons for wanting to remortgage, including: 

• Securing a Better Interest Rate: If market rates have fallen since you took out your original mortgage, remortgaging could reduce your monthly payments.​

• Avoiding Standard Variable Rates (SVR): Once your fixed or introductory period ends, lenders often move you to their SVR, which can be higher. Remortgaging before this happens can help maintain lower rates.

• Releasing Equity: If your property's value has increased, remortgaging can allow you to access some of that equity for home improvements or other expenses.​

• Consolidating Debt: Combining higher-interest debts into your mortgage can simplify payments and potentially lower overall interest costs. However, this means securing short-term debts against your home, so it's essential to consider this carefully.

• Your Current Deal is Coming to an End: If your fixed-rate or discount mortgage term is about to expire, it's a good time to consider remortgaging to avoid being moved onto your lender’s standard variable rate (SVR), which is often higher.

• You’re Not Satisfied with Your Current Mortgage Provider: If you're unhappy with your current lender’s service or their rates, switching to a new mortgage provider could offer better customer support and financial benefits.

How To Prepare for Remortgaging

You will need to figure out the costs of leaving your current mortgage, balancing these with what you’re looking for in a new mortgage. Remortgaging is not a fast process and typically takes 4-8 weeks once you apply. Before doing so, it’s vital to speak with a specialist remortgage advisor who can find the best deals for your needs and talk you through the process if you need additional help or advice.

Before starting the remortgaging process, consider the following steps:

1. Review Your Current Mortgage Terms: Understand any early repayment charges or exit fees associated with your existing mortgage.

2. Assess Your Financial Situation: Lenders will evaluate your income, expenses, and credit history. Ensuring your finances are in order can improve your chances of securing a favourable deal. In the months leading up to the process, it’s worth taking time to improve your credit score. 
   

3. Determine Your Property's Value: An accurate valuation helps in understanding your loan-to-value ratio, influencing the rates available to you.

4. Consult a Mortgage Advisor: A qualified advisor can provide tailored advice and access to exclusive deals, guiding you through the process.

Does Remortgaging Cost Money?

There may be some costs involved in the process. If you decide to remortgage with the same lender when your current deal ends and choose a new fixed product without a fee, then there are no charges.  However, this often means you aren't getting the most cost-effective deal overall.  This is where it can be useful to work with a mortgage advisor to work out the best savings, even with mortgage products with a fee, if you're unsure or don't have the time to do it yourself.

While remortgaging can lead to savings, it's essential to be aware of potential costs, especially if you decide to move lenders:

• Early Repayment Charges (ERC): Some mortgages impose penalties for early termination, typically ranging from 1% to 5% of the outstanding loan if you remortgage during a fixed deal.
  

• Arrangement or Product Fees: Lenders may charge fees for setting up the new mortgage, which can vary significantly.
  

• Valuation Fees: A valuation of your property may be required, costing between £300 and £500, though some lenders offer this service for free.
  

• Legal Fees: Solicitor or conveyancer fees for handling the legal aspects of remortgaging can range from £400 to £960, depending on the complexity of the transaction. ​Some lenders will also cover the legal fees required.

When is the Best Time to Remortgage?

Timing plays a crucial role in the remortgaging process. 

You should try to remortgage in good time, allowing yourself a several months to find a good deal before your current mortgage ends. Set a reminder six months before your current deal ends. 

Remember, leaving early may result in penalty charges. Unpredictable factors – from problems with your credit report to the complexity of your application – can delay the process, which is why it’s important to start early. 

Consider the following:​

• Start Early: Begin exploring options up to six months before your current deal ends to avoid reverting to a potentially higher SVR.  If you stick with the same lender, they may let you pick a rate up to 6 months in advance (Halifax let us do this with our mortgage) and allow you to change it if a better deal comes along before your current deal ends.
  

• Market Conditions: Keep an eye on interest rate trends. For instance, recent market stability has led lenders like Barclays to reduce the window for locking in new rates from six months to three.

The Remortgaging Process: A Step-by-Step Guide

If you already have a mortgage agreement in principle (AIP) and you’re applying with the same lender, most of the paperwork will already be complete and it may be as simple as choosing your new fixed deal via their app or online banking.

However, if you are changing lenders or want to see options with other lenders to find a better deal, then the process is a little more longwinded. Understanding the remortgaging process can demystify it and help you prepare adequately.

Here's a step-by-step guide:

1. Evaluate Your Current Mortgage: Review your existing mortgage terms, noting any early repayment charges or exit fees.
   

2. Assess Your Financial Situation: Lenders will scrutinise your income, expenses, and credit history. Ensuring your finances are in order can improve your chances of securing a favourable deal.​

3. Determine Your Property's Value: An accurate valuation helps in understanding your loan-to-value ratio, influencing the rates available to you.​

4. Research Potential Lenders: Compare deals from various lenders, considering interest rates, fees, and terms.​

5. Obtain an Agreement in Principle (AIP): An AIP gives you an idea of how much you can borrow and the terms, helping you narrow down your options.
   

6. Submit a Full Application: Once you've chosen a lender, submit your application along with necessary documentation, such as proof of income and identification.​

7. Undergo Property Valuation: The new lender will conduct a valuation to confirm the property's worth.​

8. Complete Legal Work: A solicitor or conveyancer will handle the legal aspects, including transferring the mortgage deed.
   

9. Finalise the Remortgage: Upon approval, your new lender will pay off your existing mortgage, and you'll start making payments under the new terms.​

Do I Need a Solicitor to Remortgage?

Common Mistakes to Avoid When Remortgaging

To ensure a smooth remortgaging process, avoid these common pitfalls:

• Waiting too long to start the process – If you leave it too late, you may be forced onto your lender’s standard variable rate (SVR), which is often much higher than your fixed-rate deal.
• Overlooking fees – Always factor in the total cost of switching, including arrangement fees, valuation fees, and early repayment charges.
• Not checking your credit score – Even if you already have a mortgage, lenders will reassess your creditworthiness when you remortgage. Check your score in advance and correct any errors.
• Ignoring loan-to-value (LTV) ratios – Your LTV affects the rates you can access. If your home has gained value, you might qualify for better rates, so ensure your property is accurately valued.
• Not seeking professional advice – A mortgage broker or specialist remortgage advisor can help you find the best deals and ensure the process runs smoothly.

Frequently Asked Questions About Remortgaging

Can I remortgage if I have bad credit?

Yes, but your options may be more limited. Specialist lenders offer remortgaging deals for those with lower credit scores, though interest rates may be higher.

Is remortgaging worth it if I only have a few years left on my mortgage?

It depends on your financial situation. If you have a low remaining balance, the fees associated with remortgaging may outweigh the savings. However, if you're looking to extend your term or reduce your monthly payments, it could still be a good option.

Can I remortgage to borrow more money?

Yes, if your lender agrees and you meet their affordability criteria. Many people remortgage to release equity for home improvements or other major expenses. 

How soon can I remortgage after buying a home?

Most lenders require you to wait at least six months before remortgaging, but some may offer early remortgaging options depending on your circumstances.

Can I switch to a different lender when remortgaging?

Yes, switching lenders (also known as a product transfer) is common if you find a better deal elsewhere. However, check for exit fees or early repayment charges on your existing mortgage.

Final Thoughts: Is Remortgaging Right for You?

Remortgaging can be a great way to save money, avoid high-interest rates, and even access additional funds. However, it’s important to weigh the costs, timing, and potential savings before making a decision.

If your current deal is ending soon, start researching your options around six months in advance to avoid being placed on your lender’s SVR. Seeking expert advice from a mortgage broker can also help you navigate the process and secure the best deal for your financial situation.