Correct as of September 2023.
What does remortgaging mean?
Remortgaging is the process of switching your existing mortgage to a new deal, using the same property as security. You can remortgage with the same lender or a different provider.
Remortgaging could save you a significant amount of money over the course of your loan by lowering your monthly payments or enabling you to repay your mortgage sooner.
There’s a variety of reasons why you might want to remortgage your home, for example to:
- Move to a new deal: your current deal could be coming to an end – most fixed-rate mortgage deals last between two and five years. Once your current deal expires, you’ll be put on your lender’s Standard Variable Rate (SVR), which is likely to be higher. By remortgaging, you could find a lower interest rate.
- Benefit from a lower LTV: if your property has increased in value, a lower LTV (loan-to-value) might help you secure a better rate of interest when you remortgage. LTV is the percentage you borrow against your home. The more equity you have in your property (the part you own), the lower your LTV will be. This means you’ll have a better chance of securing a cheaper mortgage deal.
- Find a more competitive deal: if you’re on a variable deal like a tracker mortgage, the interest rate you pay will go up or down in line with the Bank of England base rate. If the base rate increases, your mortgage repayments will go up. By remortgaging, you might be able to find a more competitive deal.
- Pay off your mortgage sooner: you want to start overpaying your mortgage, but your current lender won’t let you. In this case, you might want to remortgage with a more flexible provider that won’t penalise you for overpaying.
- Release equity: you could potentially free up cash to pay for an extension to your home, for example.
- Offset your savings: if you’ve built up a fair amount in savings, or you’ve had a cash windfall, remortgaging to an offset mortgage would enable you to use your savings to reduce the amount of interest you pay on your mortgage.
- To consolidate debt: you might want to consolidate debts to reduce your monthly outgoings or to borrow at a lower interest rate.
You’ve had poor service from your mortgage provider: you may want to change to one with a better reputation for customer service and satisfaction.
How do I remortgage?
Here’s how the remortgaging process works:
- Apply for the mortgage: if you’re applying to a new lender, you’ll typically need to supply proof of identification, payslips and bank statements. If you stay with your current lender, you might not need to provide all this information again.
- Assessment: your potential lender will check that you can afford the mortgage, taking into account your income and expenditure. They’ll also check your credit rating and carry out a valuation of your property.
- Mortgage offer and completion: once the lender is confident, they’ll make you a mortgage offer. When you accept the offer, your conveyancer will complete the necessary legal paperwork and arrange completion. The money will then be paid to your previous mortgage provider. If you’re borrowing extra, this will be paid to you on completion.
What fees will I have to pay to remortgage?
When you remortgage your home, there’s often an arrangement fee on the new mortgage. You may also need to pay:
- Valuation fees and solicitor fees (although some lenders may offer this for free as part of the remortgage deal)
- An administration charge
- A fee for finding a new mortgage if you use a broker. Our partner broker London & Country Mortgages Ltd (L&C)** doesn’t charge a fee
- An early repayment charge if your existing mortgage hasn’t yet come to the end of its term.
|It’s important to consider these fees when working out whether you’ll save money overall by remortgaging.|
When should I remortgage?
The best time to start looking at remortgage deals is around three to six months before your current deal is due to end.
This gives you time to look around for a cheaper deal and get organised. That way you’ll avoid being moved to your lender’s SVR and paying more interest than you need to.
Use our remortgage calculator to find out how much you could save by remortgaging.
How can I find the best remortgage deal?
Here’s how to help improve your chances of getting a better remortgage deal:
- Improve your credit rating – lenders tend to reserve their best advertised rates for customers with the highest credit scores.
- Reduce your loan-to-value – if you can borrow less your LTV percentage will be lower, so the interest rate you’re offered may be lower too.
- Lock in early – some lenders will agree to a deal in advance, so you could secure the rate and avoid being hit by any price hikes in the meantime.
- Compare deals – shop around and compare different deals from a range of lenders. This gives you more choice and a better chance of finding a rate you’re happy with.
What our expert says...
“You don’t have to wait until your current mortgage deal finishes before you can start looking for a new deal, as many remortgage offers are valid for between three and six months from the date they’re issued. Securing your next mortgage in advance means that you can make a smooth transition from one deal to the next, without having to move onto your lender’s standard variable rate.”
- Alex Hasty, Insurance comparison and finance expert
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 Correct as of September 2023.
About London & Country Mortgages Ltd (L&C)
**London & Country Mortgages Ltd (L&C) are a multi-award winning mortgage broker with over 20 years’ experience in helping people secure their perfect mortgage. Advice is provided by L&C, who are authorised and regulated by the Financial Conduct Authority (143002). L&C are not part of Compare the Market Limited. Compare the Market receive a % of the commission that our partner London & Country earns. All applications are subject to lending and eligibility criteria. L&C will not charge you a broker fee should you decide to proceed with a mortgage.
Frequently asked questions
How can I remortgage to release equity?
Remortgaging to release the cash (equity) tied up in your home means you’ll need to borrow more than you currently owe on your existing mortgage. Whether you’ll be able to take on a larger mortgage depends on affordability and the loan-to-value (LTV) ratio (the percentage of your property’s value you want to borrow).
An alternative would be to keep your existing mortgage and take out a separate new loan – known as a second charge mortgage – on your home. However, it would mean having two loans on the same property and the interest rate may be higher on the second mortgage.
If you’re aged over 55, equity release may be an option. It can be complicated, though, so it’s best to get professional advice from an equity release advisor before you go ahead.
How does the loan to value (LTV) rate of my property affect remortgaging?
Loan to value is the ratio between the value of your mortgage and the value of your property. Having a lower LTV rate could take you into a mortgage tier with a lower interest rate. The best rates are often reserved for LTVs under 75%.
But if you’re remortgaging to raise money, your LTV might stay the same or even rise, depending on how much you’re borrowing.
Can I get a new mortgage with a different lender?
Yes, you can get a new mortgage with a different lender. But you may have to pay penalties if you’re still on your initial deal. If your deal is ending or has ended, there aren’t usually any penalties to pay.
Do I have to get my house valued when I remortgage?
Only if you’re changing lender. You won’t need a valuation if you’re staying with your current lender.
Do you need a solicitor to remortgage?
Remortgaging is usually more straightforward than a new mortgage, but you’ll need to use a solicitor or conveyancer to compete the switch.
A free legal package may be included with some deals, so you won’t need to worry about covering the remortgage solicitor fees yourself.
What information will I need to remortgage?
The documentation you’ll need to remortgage typically includes:
- Bank statements and payslips for the past three to six months
- If you’re self-employed, accounts/tax returns for the previous two or three years
- P60 tax form from your employer, showing your income and the tax you’ve paid in each tax year
- SA302 tax return, if you’re self-employed or have more than one source of income
- A form of ID, like your passport or driving licence
- Proof of your address, such as utility or council tax bills.
How much can I borrow with a remortgage?
If you’re coming to the end of your current deal and you want to move to a better interest rate, you’ll likely want to remortgage for the amount that you still owe on your current mortgage.
But if you’re looking to release equity, you’ll probably need to borrow more and take out a bigger mortgage.
In both cases, the amount you’ll be able to borrow depends on your situation and how much your new lender is prepared to let you borrow.
How long does remortgaging take?
The remortgage process usually takes around four to eight weeks to complete. But it can take less than a day if you’re staying with your existing lender and not borrowing an additional amount.
Is there an age limit for remortgaging?
Different providers have different age limits, so you’ll need to check this with any provider that you’re considering. Some may have a maximum age for starting a mortgage, while others have a maximum age for when the mortgage term ends.
How can I improve my chances of being accepted for a remortgaging deal?
If you’re happy with your current lender, then you don’t need to go through any additional checks to be accepted for a new deal with them.
But if you want to remortgage with a different lender, it’s a good idea to maintain or build a good credit score by paying bills on time, not building up debts and not borrowing too much.
And make sure you’re on the electoral roll – if you’re not, it could damage your credit rating.
Can I remortgage with bad credit?
You may be able to remortgage if you have a bad credit rating, but it’s unlikely you’ll get the best rates available.
If your credit rating is low, you might want to hold off looking for a new deal until you can build your credit score.
Will applying for a remortgage affect my credit score?
If you’re sticking with your current lender and your mortgage balance, term and repayment method don’t change, then a remortgage shouldn’t affect your credit score.
But if you’re remortgaging to borrow more and your repayments will go up, then your lender will want to reassess your finances. They’ll do a hard credit check, which will be marked on your credit file and could impact your credit score.
You’ll also have to undergo a hard credit check if you remortgage to a new lender.
What happens if my remortgage application is rejected?
If your remortgage application is rejected, you’ll have no choice but to stay on your current deal or the standard variable rate for the time being.
Try to find out why you were refused; it could be that you’ve recently changed jobs or perhaps you’ve applied for other types of credit in the past few months.
Or it could simply be that the lender’s criteria has changed since you took out your last mortgage.
Find out what to do if your remortgage application is rejected.
Can I remortgage if I’m self-employed?
Remortgaging can be tougher if you’re self-employed, simply because lenders may find it more difficult to assess your financial situation. You can improve your chances of being accepted by showing:
- Proof of income – at least three years of financial records, which may need to be signed off by a chartered or certified accountant. Alternatively, a lender may accept evidence of your earnings on a SA302 tax calculation form from HMRC.
- Workflow – a healthy client list and a schedule of current and upcoming jobs can help to prove current and future incoming money.
- A good credit score – this will show that you’re able to manage your finances and have a good history of paying bills on time.
Do I need advice on remortgaging?
Taking advice from a qualified expert can give you additional protection because you can complain to the Financial Ombudsman Service (FOS) if the mortgage turns out to be unsuitable.
If you make the decision to remortgage on your own without professional advice – known as the ‘execution-only’ route – you won’t be able to complain to FOS about your decision.
We’ve partnered with multi-award-winning mortgage broker London & Country Mortgages Ltd (L&C)** to provide you with fee-free mortgage advice.
The content written in this article is for information purposes only and should not be taken as financial advice. If you require support on the products discussed here, please speak to your bank/lender or seek the advice of an independent professional financial advisor. We also have more information on our Customer Support Hub.