Leanne Macardle

Leanne Macardle

Editor
Published: 29/01/2019

At a glance

  • Remortgaging can be a way of reducing your monthly mortgage payments by moving to a lower LTV mortgage deal or switching to a lower rate than your current mortgage.
  • You can remortgage to access new, additional finance for things such as home improvements or to buy a second property.
  • If you stay with the same lender, you may be able to switch mortgages without incurring valuation or legal fees, but you may still have to pay mortgage product fees.
  • You can move between lenders to find products that are better suited to your individual requirements.
  • You may be able to remortgage to any type of mortgage, given your current circumstances.

Remortgaging explained

Borrowers who’ve repaid a significant amount of their mortgage may also be able to choose to remortgage to a lower LTV tier. Say you got your current mortgage at 80% LTV, so with a 20% deposit. After you’ve paid another 10% off your mortgage (provided you’ve chosen a repayment mortgage and house prices remain the same), you become eligible for a 70% LTV mortgage deal, which usually comes with lower rates. You only have to take a look at the comparison tables to see the difference.

The biggest difference is usually found when coming off a first-time buyer mortgage, so one at 95% or 90% LTV, as these tend to come with the highest rates. But you don’t need to move LTVs to get a better deal. Especially if you’re on your lender’s standard variable rate (SVR), you should be able to get a better rate by moving to a different type of mortgage.

Types of mortgages explained

The different mortgage types are explained in more detail in our guides, but here is a brief overview:

  • fixed rate mortgage is where the rate does not change for the  initial fixed term, which can give borrowers a sense of security and means they will know what their repayments are going to be every month until the end of the agreed period.
  • A variable rate mortgage can change its rate over time, which means less security for borrowers. In exchange for this uncertainty, lenders often offer lower rates than on fixed rate mortgages. You’ll want to look into the state of the economy and the likelihood of rates throughout the mortgage markets rising in the near future before committing to this kind of deal.
  • discounted variable rate is a subtype of variable rate mortgages, whereby borrowers can get a set discount on what is usually the lender’s SVR for a certain time. This can make it slightly more predictable than a general variable rate mortgage.
  • A standard variable rate (SVR) mortgage is most often the type that borrowers fall into rather than choose themselves. This is because the SVR is usually what borrowers fall back on when their initial deal (whether fixed or variable) ends. These therefore tend to come with the highest rates.

You should be able to remortgage to any kind of mortgage, so your choice will likely depend on what deals are available and what kind of mortgage you’d prefer. You can talk to your current provider if you’re not sure – they may even be able to offer you a good remortgage deal to keep you with them.

When should I remortgage?

There are a few signs to look out for to see if it’s time to remortgage. First and most obvious there’s the end date of your existing fixed or discounted variable rate mortgage deal, which can offer a perfect deadline for you to switch to a different product. As said, if you don’t remortgage by the end of your current mortgage term, you’ll more than likely end up on your lender’s SVR, which means your repayments will almost certainly go up – unless you move to a different deal on time.

If you’re on a deal that does not have a set end date, it can be a bit more difficult to determine when it might be time to change things up. If you’re keeping an eye on the news section of our site, however, you could use news of lower mortgage rates or impending rises to see when it might be a great time to take advantage of a competitive mortgage market to decrease your monthly repayments.

There may also be personal circumstances that could signal a remortgage might be the way to go. House prices might have increased enough, or you may have paid off enough of your mortgage, to be able to move down an LTV tier, as already mentioned, or you may want the opposite and actually borrow more money, for example for home improvements.

Remortgaging can provide the perfect opportunity to increase your mortgage amount and free up some cash – provided the lender allows this. Alternatively, you may want to consider a secured loan (sometimes referred to as a second charge mortgage) to keep your regular mortgage repayments as low as possible.

Things to consider

There may be times when you’re still in the middle of a deal with a set end date, but rates have decreased in the meantime and you know you can save money by remortgaging early. However, a lot of mortgage products come with early repayment charges, so before you make the jump, you’ll want to do some calculations to make sure that you’re actually saving money by switching mortgage deals.

Similarly, the best remortgage deals aren’t always the ones with the lowest rates – high arrangement fees can mean that the true cost of taking out such a mortgage could end up higher than a fee-free remortgage deal with a slightly higher rate. Look at the fine details as well as the APRC (which takes into account the SVR as well as any fees) to get a better idea of what you’re getting yourself into.

Another thing to consider is that, just like with taking out your initial mortgage, your credit score plays an important part in the application process and determining whether you get the deal or not. So, if you’ve accumulated some debt since the last time you applied for a mortgage, it is a good idea to eliminate as much of it as possible before applying. Note also that missing mortgage repayments will negatively affect your credit rating.

How to find the best remortgage deals

While many of the deals in the other mortgage best rate tables may be open to remortgage customers, the deals in our comparison charts are chosen specifically because of their appeal to remortgagors. As always, however, you will need to carefully compare remortgage deals yourself to find the best remortgage rates and terms for your circumstances.

If none of the deals in our comparison charts appeal to you, or you’re looking for a specific type of mortgage to move to, there’s always our mortgage calculator. This allows you to specify not only your reason for wanting a new mortgage and type of mortgage, but also the amount you’re after and more, to help you find the right product for your circumstances.

How long does it take to remortgage?

The process of remortgaging can be fairly quick if you are simply sticking with your current provider, but it could take as long as two months (or more) if you’re switching to a new lender. This will depend on your own application, if there are any difficulties to consider and the lender you’ve chosen. Don’t let such a long timeframe deter you from switching to a different lender, however, as the benefits (if you’ve picked the right deal for you) should outweigh the stress in the end.

With this timescale in mind, it might be a good idea to start looking for a suitable remortgage product at least a few months before your current mortgage deal is due to end.

Should I use a mortgage broker to arrange my remortgage?

There are benefits, as well as drawbacks, to using a broker. While most mortgage brokers will be able to look at the whole of the market for you, and even some broker-exclusive products, meaning you could end up with a better deal than you’d be able to find on your own, they do cost money. You could do your own research and speak to an adviser to get a better idea of your options.

Can I apply in advance for my remortgage?

Yes, you certainly don’t have to wait until your current deal is done to apply for a new mortgage deal. In fact, it’s generally considered good practice to start looking a few months in advance, so you don’t end up accidentally falling back on your lender’s SVR for a few months in-between deals.

Can I borrow more if I remortgage?

Yes. However, there are more restrictions on this practice since the financial crisis, so you’ll have to talk to your lender to see if it’s an option for you. Remember that a secured or unsecured loan, or equity release if you’re over 55, could be a better way to borrow money, depending on your circumstances.

Do I have to have my home revalued to remortgage?

If you are moving to a different provider and/or trying to move to a lower LTV tier, you are likely going to need a new valuation. If you’re sticking with your current provider, however, you may be able to agree with them not to have a new valuation done.

Pros and cons of remortgaging guide

  • Potential for a better rate. When your current mortgage deal comes to an end you can remortgage to a new deal rather than reverting to your lender’s standard variable rate.
  • More choice. By looking for a new remortgage deal you can compare remortgages and see which will let you overpay, reduce your mortgage term or pay low remortgage fees.
  • Free up money. A remortgage could help pay for essential home improvements or pay off other debts (this is subject to the lender's criteria), either by reducing your outgoings or borrowing more than your previous mortgage.
  • Time to do affordability tests. Just like any new mortgage, a remortgage with a new lender will require you to complete an affordability test.
  • Need to be in good financial shape. As with the initial mortgage, your current credit score will be an important part of the remortgage application process.
  • Additional mortgage fees. Each time you remortgage, you may have to pay a new product fee, and valuation and legal expenses if you change providers.

Moneyfacts tip

Moneyfacts tip Leanne Macardle

Always start looking to remortgage a couple of months ahead of the date when your current mortgage deal ends. This will give you a feel of the market and enough time to select the best remortgage for you.

Mortgage calculator

Our mortgage calculator helps you to see how much your mortgage might cost you each month.

Our how much can I borrow calculator gives you a range of how much a lender might consider lending you under a mortgage. This calculation is only an indication only.

Read our How much can I borrow for a mortgage guide to find out more about what can impact your potential sum of borrowing.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

wooden door with door handle

At a glance

  • Remortgaging can be a way of reducing your monthly mortgage payments by moving to a lower LTV mortgage deal or switching to a lower rate than your current mortgage.
  • You can remortgage to access new, additional finance for things such as home improvements or to buy a second property.
  • If you stay with the same lender, you may be able to switch mortgages without incurring valuation or legal fees, but you may still have to pay mortgage product fees.
  • You can move between lenders to find products that are better suited to your individual requirements.
  • You may be able to remortgage to any type of mortgage, given your current circumstances.

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