A popular option amongst customers is to remortgage, put simply it is where you take out a new mortgage with a new lender on a property you already own and have a mortgage on. The new mortgage takes the place of the mortgage you originally had on the property.
Remortgaging a property can improve buyer’s situations financially, either raising initial capital in a swift manner allowing one to consolidate shorter term debts, paying off a mortgage earlier than anticipated and thus reaping the rewards or reducing the size of repayments on an existing mortgage.
Remortgage help from our experts
Remortgaging may be suitable for you if:
- The introductory deal on your current mortgage is due to end soon and you’d like to avoid being transferred onto your lender’s SVR (standard variable rate)
- You want to consolidate multiple other debts
- You need money to fund home improvements
- You have a large expense coming up – like a wedding or school fees, or you want to help your children with a deposit, etc.
Remortgaging may be unsuitable for you if:
- You need a small mortgage below £25,000
- You need to borrow a very high percentage of your property’s value
- You took out your current mortgage very recently
- Your mortgage has high ERCs (early repayment charges)
Keep reading to find information on the process and for answers to some of your main FAQ’s.
You can also learn about the different types of mortgages and interest rates in our guide.
Remortgage: Frequently Asked Questions
Remortgaging before your introductory deal ends is possible, however it’s likely you’ll face ERCs which can make doing this expensive.
You can start arranging your new mortgage up to 6 months before your current introductory rate ends. If it’s ready early, your solicitor can wait until any ERC period passes before taking the final steps to put it in place.
A lender’s SVR is often at least 2% higher than their current products. Many people choose to switch to a new deal with a different lender when their existing introductory deal ends as another lender’s deal will almost certainly always be cheaper than going onto their existing lender’s SVR.
The time the remortgage process takes can vary from lender to lender and also depend on whether any complications arise, but on average it tends to take from four to eight weeks.
Remortgaging can be a way for you to borrow some extra money to fund home improvements. Essentially, you borrow more on the new mortgage than the amount you have outstanding on your existing mortgage. This extra amount can then be used to pay for improvements on your property.
One major benefit of raising funds this way is that all of your mortgage will be on the same introductory product rather than some of it being on a further advance rate, as these can often be higher than introductory rates. Another benefit is that the value of your property should increase after the work’s done – assuming there are no sudden decreases in property values.
Remortgaging can help you pay off your debt in the sense that it can allow you to consolidate multiple other debts – e.g. car loan, credit card balances. The new mortgage that you would take out would need to be for an amount that’s higher than the amount remaining on your current mortgage. This would enable you to release some equity that you could use to pay off your debts.
It’s important to note that remortgaging to consolidate debts can sometimes result in you paying more overall as, although mortgages have lower interest rates than a lot of other loans, they come with longer terms which means you earn and pay interest for a longer period.
Nevertheless, this may be a suitable option for you if your current debts have high interest rates or you need to pay them off soon.
Having bad credit will limit your choice of lenders, depending on the extent of the bad credit and how recent it was.
Remortgaging can be a way to raise funds to buy another property, whether it’s a second home, holiday let, buy-to-let, etc. These funds can form part or all of the deposit on another property or, if you raise enough, you can buy the property outright with cash. You’ll need to declare to HMRC and/or your lender(s) which property will be your new main residence.
If you want to release equity from your existing property to buy another and convert your existing property to a buy-to-let at the same time, you’ll go through a process called let to buy.
You can remortgage a shared ownership property in exactly the same way as a conventional mortgage. The only difference being that shared ownership mortgages are only available via selected lenders.
Our expert Mortgage Advisers can help you find the right shared ownership remortgage deal based on your individual circumstance.
Remortgaging a Buy-to-Let property works in the same way as when you purchase a property using a Buy-to-Let Mortgage. Lenders will assess the current monthly rent that can be achieved on the open market, along with your personal circumstance, property value and available equity in the property.
Our Mortgage advisers can assess all of this for you and give a very good indication of if you can either save on your monthly repayments or if you can release some of the equity locked into the property.
Care must be taken when looking for lenders to remortgage to, as not all lenders have products available for the Help to Buy scheme. It is also important to note, whether you are on the original Help to Buy 1 or the subsequent Help to Buy 2 government scheme. Whichever scheme you are on it is certainly possible remortgage if not always straight forward.
Our expert Mortgage Advisers understand the Help to Buy scheme and the details surrounding them and can help guide you in remortgaging to a better deal.