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Remortgaging

There can come a time when you outgrow your current mortgage simply because it isn’t cost effective or you’d like to raise more money against your home. In this case, you can remortgage your property to find a new, more suitable deal.

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The process of remortgaging is simply arranging a new mortgage on a property that you already own. It may be that by remortgaging a property you also repay an existing outstanding mortgage, but it is also possible to remortgage a property that has no outstanding mortgage already in place.

Why Should I Remortgage?

There are a large number of reasons why remortgaging may be appropriate.

As most mortgage deals offered by lenders offer an initial deal (i.e. a fixed rate, tracker etc) that after a defined period of time (such as 2 years, 5 years etc.) reverts to a higher interest rate, it may be that the motivation for remortgaging is to simply obtain a new mortgage deal to ensure payments remain at an affordable level.

As most mortgage deals offered by lenders include an initial deal that reverts to a higher interest rate after a defined period of time, it may be that the motivation for remortgaging is to simply obtain a new mortgage deal – to ensure payments remain at an affordable level.

Additionally, remortgaging can also provide the perfect opportunity to make changes to your mortgage arrangements, such as:

  • Raising funds (for carrying out home improvements or consolidating debts etc.)
  • Changing the term (to pay the mortgage off quicker or to increase the term to result in more affordable payments)
  • Adding or removing a party to the mortgage (buying out an ex-partner’s)

How to Remortgage

The remortgage process has been significantly streamlined in recent years. Once the applicant decides what they wish to achieve from their remortgage, and it has been established which lender it would be most appropriate to obtain the loan from, a formal application would then be made outlining the applicant’s circumstances and the details of the mortgage required. At this point in time, the lender will carry out checks to ensure the loan amount desired is affordable – taking into account a combination of the applicant’s income and committed expenditure. A credit check will also be carried out to give the lender the confidence that the borrower has a suitably robust credit history.

Once these steps have been successfully carried out, the lender will undertake a number of additional checks, such as assessing evidence of incomes (payslips, company accounts etc.) along with carrying out a valuation of the property in question. When all of these checks have been completed, the lender will then issue the mortgage offer, which is formal confirmation that the loan will be made following completion of the necessary legal work. This work is then carried out by a solicitor or conveyancer who is often (although not always) appointed by the lender.

What are the Main Costs to Remortgage?

There are a variety of potential costs that may be incurred, although in many situations these may not apply. The most significant costs which may occur are lender’s arrangement fees, valuation fees and the legal fees which a solicitor/conveyancer will charge for carrying out the required legal work. In many cases a lender will offer a remortgage product where the standard mortgage valuation and basic legal fees are covered by the lender. Additionally, whilst the lowest interest rates offered by the lender often incur an arrangement fee, it is only beneficial to proceed with a product with an arrangement fee if the reduced payments over the period of the deal offered (i.e. over a 2 year fixed rate) resulting in a larger saving than the arrangement fee itself. If this is not the case, it would be more appropriate to proceed with a rate offering a higher interest rate but either removing or reducing the size of the arrangement fee.

Are There Any Other Costs to Pay?

You may have fees to pay to your existing lender to repay the existing mortgage – such as administration fees or even an early repayment penalty. These penalties become payable if the mortgage is paid off before the initial deal (for example 2 years into a 3 year fixed rate) has expired. These are usually a percentage of the outstanding mortgage balance, so may be several thousands of pounds. As such, it is always of great importance to check the details of your existing mortgage deal first. Other fees payable are likely to be much smaller in nature, such as telegraphic transfer fees (the cost of electronically transferring money from one company to another), land registry costs etc.

Using a Mortgage Broker to Remortgage

There are multiple benefits to using a mortgage broker when arranging a remortgage.  Not only will a broker be able to find the lender most suited to your personal circumstances (taking into consideration factors like credit histories, affordability, lenders criteria etc.) they will also ensure the most appropriate deal is arranged. Whilst the lowest headline rates on offer can seem very attractive, the fees these may charge will only usually be justifiable for much larger mortgage balances. A broker will therefore take all of these factors into account and will often be able to find a deal that can save hundreds or even thousands of pounds.

Best Remortgage Deals

The best deal available will depend upon an individual’s circumstances, including credit histories, affordability, the level of equity in the property etc. Consideration would also need to be given to the level of fees charged, along with the type of deal that is desired such as a fixed rate, tracker etc. An adviser will take the time to understand a client’s circumstances and requirements in detail, to make sure that the right deal for the individual in question is arranged.

Let’s Get Started


Contact your local Mortgage Centre to speak to one of our experienced advisers today. They will be more than happy to go over all of the above and more. Remortgaging doesn’t have to be complicated. Let us do the hard work for you.

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FAQs about Remortgaging

Remortgaging to save money

It’s all about finding a mortgage with a better rate of interest. When you take out a new mortgage, you’ll typically receive an introductory deal, which will offer a fixed, discounted or tracker rate for the first few years of the mortgage, before reverting to the lender’s standard variable rate. These introductory deals typically last for between two and five years, after which point, you’ll normally be able to find a better deal elsewhere.

So, when your introductory period ends, use the annual percentage rate (APR) as a measure to compare your deal with the mortgages offered by other lenders. However, it’s important not to only look at the headline rate. You should also factor in the costs and fees associated with moving your mortgage elsewhere.

Remortgaging to raise money

You can use the monies from a remortgage to increase the value in your home and, as long as you can afford the new repayments, this can be an effective method of raising extra capital for home improvements. This type of remortgage is also commonly used to consolidate debts, but you should seek expert advice before you use a remortgage to do this.

Remortgaging to find a better mortgage

Sometimes a remortgage is the right thing to do because your circumstances have changed and your current mortgage is no longer the most appropriate mortgage for you. For example, you might be starting a family and want the predictability of a fixed-rate mortgage rather than a tracker. Alternatively, you might be earning more money and decide you want to make overpayments on the mortgage without a penalty.

How much does a remortgage cost?

A remortgage may offer you better value in the long run, but switching your mortgage provider can cost in excess of £1,000, so it’s essential you factor this into your calculations. The costs of remortgaging include:

  • Your current lender’s fees – Check whether your current mortgage has an early repayment charge or exit fee as this will add to the costs of remortgaging.
  • Fees charged by your new lender – You could be charged a number of fees, including a booking fee, reservation fee, valuation fee and a fee for releasing the funds.
  • Legal fees – This will cover the cost of conveyancing work that may need to be done when refinancing your property.

In a lot of cases, your new lender will be willing to pay all or part of your current lender’s fees to help switch lenders; however, the cost of remortgaging is still a potential stumbling block.

How much could I borrow?

There are many factors that come into play when working out how much you will be able to borrow on a new mortgage: the value of your property, your income, how long you want to borrow for, and how long you have left to run on your current mortgage.

Want to know how much you could borrow, or what your monthly payments might be? With our handy mortgage calculator it’ll just take you 2 minutes to answer 4 simple questions and get an approximate quote. Give it a try now!

The remortgage application process

A remortgage will be taken out with a new lender, so you’ll have to go through the mortgage application process in full. You will have to show evidence of your income, such as payslips and bank statements, along with details of your outgoings, like credit card repayments, personal loans, utility bills and other household costs.

To check the affordability of the remortgage, lenders will also carry out a ‘stress test’, which is designed to see whether you could keep up with the repayments if interest rates were to rise.

Remortgaging to pay off debts

Whilst the longer term implications of consolidating debts could be a larger sum of interest paid over a longer period of time, the immediate benefits can be of huge significance. Borrowing equity that has built up in a property to repay debts – such as unsecured loans or credit cards – can reduce immediate monthly outgoings, and help keep your finances under control.

Remortgaging for home improvements

This is a very popular reason for raising money within a remortgage. Provided that there is sufficient equity in the property at the time the application is made – and that other standard criteria can be satisfied – lenders will often be happy to lend additional funds to be used towards improvements to a property such as extensions, replacement kitchens, bathrooms, or even for smaller projects like redecoration. This can add value to a property or make it more desirable in the event of a sale.

Remortgaging to release equity/raise capital

Along with paying off debts and carrying out home improvements, there are many other reasons why a lender may be prepared to increase a mortgage and thereby release capital. This may be for a one-off purchase like a car, boat, furnishings etc. It may be to pay for a special occasion like a wedding or a holiday. A lender may even be prepared to lend for scenarios such as a business venture, for investment purposes (which could include share purchases, retirement planning etc.) or even to buy a second property, such as a buy to let investment.

Remortgaging a help to buy property

For properties purchased with a Help to Buy equity loan, remortgaging can be slightly more complicated – although this is in no way restrictive. There is additional legal work that would need to be carried out – as the equity loan provided results in a legal charge being put in place to protect the provider of the Help to Buy loan. The additional work required to ensure this charge is properly dealt with usually comes at a small additional cost, although in recent times many lenders have started offering cashback deals to go towards covering the cost of this work. Alternatively, if sufficient equity has built up in the property and there is sufficient income available, it may be possible to raise additional money to pay off the Help to Buy loan in full, thereby saving the interest costs that this loan will incur over time, and also ensuring the amount payable to pay this loan off does not increase if the value of the property were to increase in the future.

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