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If you're coming to the end of your fixed rate mortgage or you want to see if there's a better deal for your current mortgage, remortgaging could be the answer. We explain what it involves.

What does remortgage mean?

Remortgaging is the process of changing your existing mortgage deal. This might involve taking out a new mortgage on the property you own or borrowing additional money against your property.
You might stay with your existing lender and get a new mortgage with them, or you could decide to switch to a new lender entirely.

Nothing else changes with your home - your new mortgage will be secured against the same property - but it will mean different, and usually better, terms.

How does remortgaging work?

Remortgaging works the same way a normal mortgage does, although there may be more legal work involved. Here are the main steps:

  1. Find a new mortgage
    To start with, ask your current lender for a new deal. They may be able to offer you a better option to keep you with them. Then, shop around to see if there are any better offers. Make sure to take all monthly costs into consideration, not just the interest rate, and think carefully about what deal would work best for your specific situation.
  2. Apply for your remortgage
    When you've decided which mortgage deal to go for, you're ready to apply. The application process involves a credit check, and you will need to provide proof of earnings and details of your outgoings and financial commitments. The lender will need to make sure the mortgage is affordable.
  3. Receive your offer
    After carrying out their checks, the lender will provide you with a mortgage offer if you meet their requirements.
  4. Find a conveyancer or solicitor
    The various legalities of remortgaging require a conveyancer or solicitor, who can manage the paperwork and transfer of funds on your behalf. Your lender may have a partner firm or you can find an independent solicitor or conveyancer to work for you.
  5. Set the completion date
    Once the legal work has been completed, a completion date will be agreed. This is the date that your new mortgage starts, and your old mortgage is repaid and closed off.
  6. Sign your new mortgage deed
    You'll then be asked to sign the deed for your new mortgage.

Could remortgaging be right for you?

Depending on your circumstances, remortgaging could be a good option.

Before you act, check the costs of remortgaging. Your existing mortgage may have an early repayment charge (ERC) and exit fees.

Reasons to remortgage include:

  • Finding a lower interest rate mortgage - if your existing mortgage offer rate has ended or will end shortly, you might find a better deal
  • Apply for additional borrowing - you might want to borrow more for home improvements or consolidate any existing credit card or loan debts
  • Safeguarding against potential rate rises in the future - you can opt to fix your interest rate
  • Releasing equity from your home - as part of the deal, you could generate a cash lump sum, perhaps to pay for planned home improvements
  • Changing the term or features of your mortgage after a change in your personal circumstances

When do homeowners remortgage?

Most homeowners remortgage when they come to the end of a fixed rate deal, such as an introductory tracker or discounted rate. Your lender will then move you on to a variable rate, which can mean you're paying a lot more, which is why people remortgage.

Remember to keep an eye on your calendar - you don't want to wait until the last minute to sort out a remortgage. Financial experts recommend that you start researching your options at least six months before your current mortgage offer rate period is due to end.

If you are not coming to the end of a fixed rate deal, you will need to check whether there is an early repayment charge or fee for exiting your current mortgage.

It's also worth making sure you maximise the equity in your home in order to secure a better rate when you remortgage.

Fixed vs variable mortgage

With a fixed rate mortgage, you'll pay the same monthly cost. This allows for more accurate budgeting, although you are likely to have to pay charges if you exit the mortgage during the incentive period.

A variable rate mortgage moves up and down with the interest rate, so your monthly payments will vary. There are generally two types of variable rate mortgages:

  • Tracker mortgages move according to a fixed economic indicator, e.g. the Bank of England base rate
  • Standard variable rate mortgages are tied to the lender's standard variable rate (SVR), which they can move as and when they choose

You can also get short-term discounts on a lender's SVR and capped deals, which impose a maximum limit on a variable rate.

Fees and charges

Just like a mortgage, there are various fees and charges to keep in mind if you're thinking about remortgaging.

Arrangement fees

These are basically a setup fee. You must incorporate this cost into your remortgage as it might be more beneficial to pay a larger arrangement fee in return for a lower interest rate, or vice versa. It all depends on how much you want to borrow and what the total monthly mortgage cost would be.

Booking fee

Some mortgage lenders will charge this up-front, fee in addition to arrangement fees.

Early repayment charges

As the name implies, these charges are payable for getting out of your mortgage arrangement early - for example, if you leave your five-year mortgage after two years. The early repayment charge usually applies for the period of a fixed rate or discount rate, but doesn't always apply. Most lifetime tracker rates offer flexibility with no early repayment charges.

Exit fees

Your current lender may charge this fee when you leave them. Your exit fee will be locked into your original mortgage term and is used to cover the lender's admin costs for shutting down your mortgage.

Keep in mind: You'll also need to consider your legal and valuation costs. Some mortgages may include free valuation or legal work, so always weigh up the total costs of remortgaging rather than going straight for the lowest rate.


Did you know...?
The more equity in your home, the more competitive the mortgages available to you will be.

Think carefully before securing other debts against your property.
Your property may be reposessed if you do not keep up repayments on your mortgages.

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