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

There are a few things to understand before we get started.

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)

Many of the stages of the remortgaging process are similar to that of getting a mortgage to buy a house, although in other ways the process is simplified.

You need to get your property valued, as well as engage a solicitor who will handle the transfer of deeds from one lender to another. However, it’s not unusual for lenders to offer to arrange these as part of their service, often as part of a “fee-free” remortgage offer.

On submitting your mortgage application and supporting documentation to the new lender, it will be subject to the same checks as any other residential mortgage – including an assessment of your ability to afford the loan and a check on your credit record with an external credit reference agency.

After you receive your mortgage offer and all legalities are confirmed to be in order, the lender will repay your existing mortgage and your new mortgage will commence.

It’s possible to search for mortgage deals using price comparison websites or searching various lenders’ products yourself, but this can restrict the range of deals you can choose from, especially if you stick to just the big high-street banks and building societies.

A professional mortgage broker can search for deals from across the UK mortgage market, and will usually have access to exclusive deals that aren’t available on the high street.

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    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.

    Remortgaging can cost very little from the outset as most lenders compete against each other to win your business. It is quite common for lenders to offer Free Mortgage Valuations and a Free Legal Package to carry out the conveyancing.

    That said some lenders may not offer any benefit and both the cost of the Mortgage Valuation and Legal Costs will have to be paid by you. This is on top of any mortgage lenders arrangement fees and Mortgage Broker fees that may become payable.

    Other costs to look out for are any early repayment charges to your current lender and any nominal fees that may be charged for closing down your current mortgage. When our Mortgage Advisers assess your circumstances, they will take into account all of the fees mentioned ensuring that remortgaging is the best option for you.

    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.

    When deciding which mortgage deal is best to remortgage onto, it is worth noting that there are plenty of products that are completely fee-free. These products will typically have the Mortgage Valuation and Legal Package included free of charge, as well as no arrangement fee. Some products will also offer a small amount of Cash Back to offset any closing down fees you may incur with your current lender when ending your original mortgage.

    However, you should be aware that just because a mortgage is billed as ‘fee free’, or comes with other incentives, this doesn’t always mean it will be the most favourable deal, or the most suitable product for you. As with all business transactions, costs or services offered for free at one point are often made up for in other aspects of the deal or product. For example, you might only be able to get a shorter introductory term on the initial deal, or need to supply a larger deposit, pay a slightly higher interest rate or find there are other fees or charges for other things.

    The exact pros and cons of any mortgage deal can be quite intricate at times, and the balance you want to strike with your remortgage package will be down to your individual circumstances and priorities. A fee free remortgage will make sense if the savings are not completely negated by the amount you will pay on the new interest rate over the lifetime of the new deal, or if you have to pay a high early repayment fee if you choose to switch to another mortgage product again at a later date. These calculations can get quite complex and it’s easy to omit one or two factors that you wish you’d known about earlier, which is why it is always worth speaking to one of our expert advisers to get sound guidance as to which remortgage product will be the right one for you.

    A product transfer is a technical term used to describe the process of changing the rate with your current mortgage provider usually upon or nearing the expiry of your current deal.

    There are many pros and cons of remaining with your current lender with the main benefit being, that if simply making a like for like change i.e. not borrowing any additional funds, no additional underwriting or affordability checks will likely be necessary making the process relatively simple.

    However, although many lenders are now much more productive with their customer retention, remaining with your current lender may not be right for you if they are not offering you the most appropriate or best value product when compared to the market as a whole.

    Here at The Residential Mortgage Hub our team will consider your current lenders offers and also take all other aspects such as costs etc into consideration when making our recommendations thus ensuring you can feel confident that the route you decide upon is the most appropriate.

    Here at The Residential Mortgage Hub we receive many enquiries asking if a remortgage can be arranged up to 95% of a residential property value. Whilst it’s true that in the market as a whole the maximum most lenders will permit a remortgage to is 85% of the value, there are some that will lend up to 90% and indeed, as at the time of writing, some that will consider up to 95% loan to value.  Certain criteria will still be applicable such as the lenders assessment of the borrower’s affordability and also if the remortgage includes any element of capital raising eg. if any is being used for debt consolidation this may reduce the overall loan to value a lender will permit. Different limits will also apply if the property is a buy to let.

    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.

    An Interest-only mortgage can be remortgaged onto a new deal. However, you must be able to adhere to some strict criteria as these types of mortgages are deemed as higher risk lending by the regulator.

    Typically, lenders will consider an Interest-only remortgage for those who have good levels of income, loan to values of 75% or less, a significant amount of equity, as well as minimum property values above certain parameters.

    To check if you qualify for an Interest-only remortgage it is advisable that you get in touch with one of our specialist Mortgage Advisers who will be able guide you further.

    Important information