REMORTGAGE

What Does Remortgage Mean?

To remortgage means to switch from one mortgage lender to another but stay in the same property. The most common time to remortgage is when your current product has come to its end. 

Remortgaging can help you save money on your monthly repayments, raise the money to pay off some existing debts or fund something like a home improvement project. It’s not suitable for everyone though. We explain when it's an option, what happens, the process you go through and the costs you may incur below.

Why should I remortgage?

There are many reasons you may decide to remortgage, for example:

  • Your existing mortgage deal is coming to an end. You’re current deal will end, and when it does, your terms and interest rate will change. If you don’t take any action, you will move to your lender’s standard variable rate automatically, which could increase your monthly payments.
  • You want to release equity to fund home improvements. Or maybe even take a cheeky holiday!
  • You’re looking to consolidate debt. This is especially attractive if you have unsecured debts with high interest rates, such as credit cards.
  • You wish to secure a new fixed-rate deal. You may have got a bit of a bum deal when you signed your mortgage agreement, so it might be time to shop around for better mortgage rates and terms before your current deal is up.
  • Your credit rating has improved. Go you! With your new credit status, you may want to switch your mortgage sooner than planned to take advantage of better rates.

What is an early repayment charge (ERC)?

An ERC is a penalty that your mortgage lender may charge you if you end your mortgage early. When you come to remortgage, it’s important to know whether your current deal has an ERC, how much it is, and the deadline for paying it. We recommend completing your new remortgage deal on the day after your current product ends to avoid paying an ERC. However, in some circumstances, completing your new deal before your current mortgage deal ends can also have its advantages.

Should I remortgage and pay an early repayment charge (ERC) on my existing mortgage

In some circumstances, it can be a good idea to pay the ERC on your current product. You may be eligible for a better or cheaper product, for example, or you might be concerned that interest rates will increase before you’re ready to remortgage. The ERC payment can be added to your new mortgage deal, but we will help you understand the options very carefully and help you save money where possible.

How soon can I remortgage after buying a property?

In some circumstances, you can remortgage your property as soon as day one of ownership. For example, you may have bought your property below its full market value, perhaps at an auction or from a family member. You may be able to take advantage of the additional equity in your property to increase your borrowing power.

What are the costs involved in remortgaging?

Different mortgage products have different fees and charges, including arrangement or booking fees, although these can often be added to the mortgage loan. Some products will charge valuation fees, some offer this for free. You may also be charged legal fees if not included in the new product, although the new lender may offer cash back towards the cost of legal work. If you wish to remortgage early, you may also need to pay an ERC.

Can I remortgage without a broker?

Yes, it is possible to remortgage without a broker, but why push boulders uphill? Going to a bank or lender can be very limiting. Apart from the fact they can only offer their own products, they offer a non-advised service, meaning they’ll outline the options – but it’s up to you to work out which one is best. Whereas a mortgage broker can recommend the best mortgage deal from a wide range of high-street and specialist lenders to suit your personal and financial circumstances. Then there’s a matter of time. Unless you have hours and hours to research or contact each and every lender, you risk missing out on the best deal. A mortgage broker can help you understand your options and then do the searching on your behalf. Not only is it a shortcut, but it could save you money, not to mention your sanity!

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