Remortgaging Explained: When, Why, and How
Thinking about remortgaging your home? Whether you want to switch to a better mortgage rate, release equity, or avoid moving onto your lender’s standard variable rate, remortgaging could be a smart financial move. It can help reduce your monthly repayments, give you access to extra funds, or simply offer more flexibility. In this guide, we explain when remortgaging makes sense, how the process works, and what costs you should be aware of.
What is remortgaging?
Remortgaging is when you take out a new mortgage on a property you already own, either with your current lender or a new one. It usually involves switching to a new mortgage deal, often to get a better interest rate or release equity from your home.
It is not the same as moving home. Your property stays the same, but your mortgage terms change.
When should you consider remortgaging?
There are several situations where remortgaging might make sense:
- Your current deal is ending
Many people are on fixed-term mortgage deals that last two, three, or five years. Once that term ends, you are usually moved onto your lender’s standard variable rate (SVR), which is often higher. Remortgaging before this happens could save you money.
- You want to get a better rate
Even if your fixed deal is not ending just yet, interest rates may have dropped or your circumstances may have improved, such as a better credit score or a lower loan-to-value ratio. This could make you eligible for more competitive deals.
- You want to borrow more
If you need funds for a home renovation, a wedding, or another big expense, remortgaging to release equity from your home could help, as long as you can comfortably afford the repayments.
- You want more flexibility
Some mortgage deals come with features like the ability to overpay or take payment holidays. If your current deal does not offer this flexibility, remortgaging might give you more control.
What is the process like?
Remortgaging is usually quicker and more straightforward than getting your first mortgage. Here is how it typically works:
- Speak to a mortgage adviser
They will help you understand your options, compare deals, and work out whether remortgaging makes financial sense for you. - Get a mortgage offer
Once you have chosen a deal, your adviser will help you apply. The new lender may run a credit check and might require a valuation of your property. - Legal work and completion
Some basic legal work is involved, especially if you are switching lenders. Many remortgage deals come with free legal services to make this easier. - Your new deal starts
Once everything is approved, your new mortgage will pay off the old one and your new repayments will begin.
Are there any costs involved?
There can be. Potential fees include:
- Early repayment charges (ERCs) if you are leaving your current deal early
- Arrangement fees for your new mortgage
- Valuation or legal fees, although many remortgage deals include these for free
A mortgage adviser can help you weigh the costs against the potential savings.
Final thoughts
Remortgaging can be a great way to save money, access extra funds, or get a deal that better suits your needs. But timing is important, and it is not always the right move for everyone. Speaking with a qualified mortgage adviser is the best first step. They will look at your full picture and guide you through the process with confidence.
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