Remortgage Guide & FAQs
The key points to know about remortgaging
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Remortgaging a property is a straightforward process for some, but for the countless UK homeowners with complex circumstances, it isn’t quite so simple.
We often hear from customers who are uncertain whether they should remortgage, those who have been turned down for one by a mainstream lender, and even those who are unsure what remortgages entail. Moreover, many release equity are also confused as to whether a remortgage or secured loan is the best option.
If you fall into any of those categories, are in the market for a remortgage or simply want to find out more about them, you’ll find the answers you’re seeking below.
Below, the following topics are covered…
- Remortgage meaning
- Why should I remortgage?
- When should I remortgage?
- How much deposit/equity do I need to remortgage?
- How to remortgage your home
- Remortgage valuation
- How long does a remortgage application take?
- Remortgage rates in the UK
- How much does it cost to remortgage?
- Can I change the terms when remortgaging?
- What to do if you’ve been declined for a remortgage
- What happens on remortgage competition day
- Should I remortgage or get a loan?
- Speak to a remortgage broker
We also have a bonus FAQ section
We’ll cover such topics as –
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Remortgage definition: What is a remortgage?
We often hear the question “what does remortgage mean?” and you shouldn’t be embarrassed to ask it. If your experience of one is limited to the Monopoly board, you can be forgiven for not knowing the exact meaning or definition of the term.
How a remortgage works
Simply put, remortgaging is the process of taking out another or a different kind of mortgage on a property you own, and there are several ways to go about this.
Firstly, you can remortgage your house (or any other type of property you own) with the same lender as a product transfer (internal remortgage). This is literally just a straight swap, usually at a more favourable rate, and doesn’t necessarily involve borrowing any extra cash.
Secondly, you can switch to a new lender and they will pay the money released to the original provider via a solicitor, allowing the mortgage to continue on the revised terms.
Why remortgage your home?
Now that we’ve outlined what a remortgage is, you’re probably asking why do people remortgage? And the answer is for all sorts of purposes.
To get the better interest rate
One of the main reasons to remortgage is to secure more favourable rates, whether that’s with a new lender or the existing provider. Many seek to do this when their initial rates period is coming to an end, to avoid having higher monthly payments to contend with.
So, why else would someone remortgage a house?
Another reason that’s often cited is to borrow more money, and the maximum loan to value (LTV) ratio you’ll get depends on what you need the funds for.
Some remortgage to pay off debts, others to buy another property with the additional capital they’ve unlocked, and the lenders will limit their risk by capping the amount they’re willing to lend based on the value of the property.
The table below will put this into perspective…
Deposit required for different remortgage purposes
|Most Lenders||Specialist Lenders|
|Mortgage Swap (No additional £)||90%||95%|
|Buy Furniture, Electrical or White Goods||80%||90%|
|Buy Car, Caravan or Boat||80%||90%|
|Pay For School Fees||80%||90%|
|Pay for Medical Expenses||80%||90%|
|Other Personal Consumption||80%||90%|
|Buy Final Share in Shared Ownership||90%||90%|
|Buy a Self-Build Home||75%||80%|
|Purchase a Second Home||80%||90%|
|Buy a Holiday Home||80%||90%|
|Buy Freehold or New Extended Lease||80%||90%|
|Buy a Share in The Freehold||80%||90%|
|Buy Land to Extend Security||80%||90%|
|Invest, Save or Share Purchase||Not Usually Allowed||90%|
|Invested for Business Purposes||Not Usually Allowed||90%|
Downsizing or let to buy
The other of the most common reasons for remortgaging include to release equity from a property and to switch to a new mortgage product. For instance, a householder might be keen to move or downsize, and turn their existing home into buy to let accommodation.
When should I remortgage?
The answer to this question very much depends on why you’re seeking a remortgage.
But consider the following…
Before your current deal ends
If you’re looking for a new deal to avoid ending up on your lender’s standard variable rate (where most mortgages end up after their initial rate period), it’s advisable to start shopping around at least 14 weeks before the initial rates period ends.
Generally, this is because it can take a while to find the right deal and get it completed. Because most mortgage offers last long enough for you to lock in the deal you’ve applied for, you can comfortably complete 3 months later at the end of your old mortgage tie-in period and refinance on the day you need it.
Should I remortgage now or wait?
One of the most important things to keep in mind here is whether you will incur any penalties for pushing ahead immediately, as this can drive up the overall cost.
If not, and you find a deal that suits, it makes sense to go ahead to lock that deal in, as you never know where rates will go, and waiting may mean you’re faced with higher rates when you do come to pull the trigger later on.
Consider whether there’s an early remortgage penalty
Technically speaking, you may be able to remortgage at almost any time but doing so within the fixed period could see you hit with extra charges from your lender.
Remortgaging before the end of your initial mortgage period will likely come with an early remortgage penalty, which can vary from product to product but is often a percentage of the loan.
What if I want to remortgage early?
There’s a legal requirement which states that a borrower needs to have lived in their home for at least six months before they can remortgage, but this is waived in some situations, such as when the property is inherited or when one sibling is buying another out.
If you’re unsure whether now is a good time to remortgage, get in touch and the remortgage advisors we work with will offer their expertise and connect you with the best lender to handle your application, should you choose to press ahead.
How often should I remortgage my house?
Another question we often hear is, should I remortgage every 2 years? And the answer is not necessarily.
The two-year time-frame only applies if that’s the length of your fixed-rate period (two years is standard, but some are shorter and others longer) and there are savings to be made by switching before the standard variable rate kicks in.
As a general rule, you should always consider remortgaging when your introductory rate is on the verge of ending to avoid paying more each month.
Most mortgages have an incentive period where the rates are more favourable, and this can last anywhere between two and 10 years, sometimes even longer. Once this has expired, the borrower will pay their lender’s standard variable rate unless they negotiate a new deal.
Remortgaging could potentially help you find your way back onto an agreement with an incentive period, but be mindful of the overall cost, as some mortgages come with hefty upfront fees that should be offset against the potential monthly savings.
Do I need a deposit to remortgage?
Generally, no – any equity you’ve built up serves as your deposit.
Some lenders will have a minimum equity requirement of 5-10% equity to ensure their customers end up on competitive rates, but the more equity you have, the more favourable the interest rates in most cases.
The exception to this would be if someone is currently at a midpoint in their LTV banding (lenders generally lend @ 95% LTV, 90%, 85%, 80% etc.), and was required to put some cash in themselves to move onto the lower band.
- Someone with a house value of £100k and current mortgage of £97k, would need to put in 2k to get to £95k (95%) before they could refinance, as no lenders currently offer remortgages to 97%.
- This may also be relevant to those who are at a mid-point in their LTV and want to get a much better rate – if the cash is available and your LTV is 86%, it would potentially pay to put in the extra 1% as cash and benefit from much more attractive rates on offer at 85% when compared to 90%.
Can I remortgage with negative equity?
So, this also begs the question of whether it’s possible to remortgage with negative equity, (i.e. a mortgage of £105k and property worth £100k) and the answer is yes, but with a caveat – Your current lender is only one who can offer you a no equity remortgage deal, and they will likely only allow you to switch rate, rather than borrow more money.
The table above will tell you the deposits required for different remortgage purposes.
How to remortgage your home
If you’re one of the many who are unsure how to remortgage, the good news is that it’s relatively straightforward in most cases. Complications can arise if you have little or no equity, or your circumstances have changed since you bought your home, but otherwise the remortgage process will be smooth at most UK lenders.
Eligibility requirements for remortgaging
To get the ball rolling on a remortgage application, you must…
- Establish your loan to value
- Ensure you can afford the new loan
- Decide what type of mortgage you want
- Find the best deal
- Make an enquiry here to speak to a whole-of-market
Establishing your LTV
To work out your loan to value (LTV), first decide how much you want to borrow (i.e: the size of old mortgage plus any additional borrowing), then work out how much your property is worth. If you don’t know the answer to the latter, head to Zoopla or mouseprice for an idea of what similar properties are valued at in your area.
Next, divide the loan value by the house value and multiply by 100 to determine your LTV.
It is always displayed as a % against the property value, so a £90k mortgage and £100k property would be a 90% LTV.
Affordability ranks highly on most lenders’ remortgaging eligibility requirements checklist, so it’s vital to ensure the amount you’re hoping to borrow is one you’re capable of repaying.
The affordability criteria for a remortgage will vary from lender to lender, as each take different income into account and some have a more generous calculator than others. As a general rule, though, take the combined annual income of the applicants minus outgoings and multiply it by 4.5 for a rough idea of the maximum amount you can borrow.
Some providers, however, might lend up to five times your annual income, and one or two up to six time your income, under the right circumstances.
In terms of how much you can remortgage for, most lenders offer loans of up to 90% of the property’s value. So, if your home is worth £100,000, you can borrow up to £90,000, although a handful will consider 95% LTV.
Decide what type of mortgage you want
There are many different types of remortgage deals, but generally speaking, they fall into two broad camps: fixed rate and tracker.
With a fixed-rate mortgage, the lender agrees to give you a short-term special rate during an incentive period, which can last for anything between two and 10 years, although some borrowers might even extend it beyond that.
The amount you pay during the initial period will remain the same, regardless of changes to the rate of inflation, but the borrower will be placed on the lender’s standard variable rate after the fixed period comes to an end, unless they remortgage again.
With tracker-rate mortgages, the rate you pay moves in line with the Bank of England’s official borrowing rate. These mortgage types are popular during times of low interest or declining rates, but are sometimes a gamble as rates changes can be difficult to predict.
Lenders also offer “variable rate” mortgages, which are almost the same but the rate tracks the lenders standard rate, rather than the Bank of England rate, which is subject to change at the lender’s own preference.
Find the best deal
After you’ve used the LTV calculation we discussed earlier to determine which remortgage products you’re eligible for, it’s time to search the whole of the market for the best deals.
The brokers we work with have access to the entire market and can connect you with a lender tailored to your circumstances to ensure you get the deal that’s right for you.
Going through this channel is a more sensible option than turning to your bank – as you will be limited to their products – or browsing comparison websites, which typically throw up rates tables with little relevant context and highlight sponsored products, regardless of whether they are a good fit for you, or indeed if you’d qualify for them or not.
Make an enquiry here and we’ll connect you to the right remortgage broker for your needs and circumstances.
Should I get my house revalued before a remortgage?
Most lenders will instruct a house or property valuation as part of their remortgage process, so arranging one yourself may be unnecessary. This could be a thorough valuation by a surveyor, a drive-by valuation, or simply an automated desktop valuation.
How do banks value a property for remortgage?
The valuation is conducted independent of the lender, but some providers will bill you for the remortgage valuation costs, and fees can range between around £250 up to £1,500 (depending on the property value),
Can I get a free remortgage valuation?
Some providers will offer free valuation as part of their remortgage package.
If you’ve already had a valuation carried out on your property and are sceptical of the figure you were quoted, you can always cross check it against house prices in the area on Zoopla or mouseprice as their data comes from the Land Registry Database.
Free valuation tools such as these will not paint a 100% accurate picture of what your home is worth, but should give you a general idea of how much it will sell for.
What to do if you think your remortgage valuation has come in too low
Lenders will only offer you a deal based on the remortgage valuation survey they have instructed, so arranging a report independently won’t help your case if you’ve already opened negotiations.
But if your own research suggests the deal your lender is offering will leave you short-changed on valuation, you can always look for another provider.
You may have paid a fee up to now, which is unlikely to be refunded post-valuation (check the illustration), but it is possible to find a new lender using a different panel of surveyors, who might not charge an upfront application or valuation fee (quite common on remortgages these days).
Alternately, it is possible to appeal against a lender’s valuation decision, although these challenges are often unsuccessful and require a fair amount of legwork on your (or your brokers’) part to produce a list of several comparable properties where the valuations/sale prices are higher than what your lender has suggested.
How long does a remortgage application take?
Customers often ask us “how quickly can I remortgage?” and the answer will vary from lender to lender and borrower to borrower.
As previously mentioned, a remortgage application is usually more straightforward than a regular mortgage and can take anywhere from two and eight weeks. For those in more complicated circumstances, such as individuals with credit issues, it may take longer.
How quickly can I remortgage if I’m switching to a new provider?
The process may also be lengthier if you are switching to a new provider when compared to a product switch with your current lender, which can happen in a couple of days.
Some lenders are running very quick operations for those straightforward applications that are switching to them from another lender, and lower loan to values (LTVs) attract quicker ways of processing – for instance, those borrowing under, say, 75% LTV, denote less risk and may not require thorough income evidence to be produced and automated valuations (AVMs) that are done by the system in a few minutes.
It has been known for these kinds of applications to go through to mortgage offer in a matter of hours, leaving just the legal work and release of funds to finalise the switch.
What paperwork/documents are required for a remortgage?
Most lenders will want to see the following during the remortgage application process…
- Three months’ worth of bank statements
- Your last three wage slips
- Three years’ worth of accounts if you’re self-employed (although select borrowers will settle for less than that – some just 9 months)
- Proof of any bonuses/commission
- A copy of your latest P60
- ID documents (usually a passport)
- Proof of address (utility bills, credit card statements etc)
Some of the mainstream mortgage providers may insist on hard copies of the above, which is something to be mindful of if you’ve gone paperless, and it may speed up the application if you send all of the documents in one batch.
In addition to this paperwork, certain lenders will require a witness signature on remortgage applications and solicitors will generally request this as standard.
How long does a remortgage offer last?
On average, mortgage offers are typically valid for between three and six months, although some lenders may impose a different timeframe on remortgage offers, usually towards the lower end of that scale.
It is generally OK to extend a mortgage offer beyond this in certain circumstances, but a lender may wish to request more income evidence (in case the applicant has lost their job), to re-do the valuation (in case this has dropped / property has burned down!), or even to change the product being taken (in case rates have increased significantly).
Getting the best remortgage rates in the UK
For remortgage customers with clean credit, the necessary amount of income and plenty of equity, getting the best remortgage rates in the UK can be refreshingly simple.
If you fall into one or more of these categories, you should have a wide range of lenders to choose from if you apply through a whole-of-market broker, like the ones we work with.
Of course, not everyone will meet the eligibility criteria with every lender as some are stricter than others. Some impose higher minimum income requirements than their competitors, while others are less flexible when it comes to dealing with borrowers over 75.
The most crucial factor where remortgage rates at UK providers are concerned is the amount of equity you hold. Simply put, the more you have tied up in your property, the lower the risk to the lender, and therefore the more favourable rates they will offer you.
For the best rates you should talk to one of the advisors we work with. They have access to the whole market, not just a few lenders.
What does remortgaging cost?
Costs can vary. In recent times, a lot of remortgage deals are incentivised to reduce the barrier for someone to switch their mortgage to another provider. As such, a lot of remortgage deals are positioned with no upfront fees, and sometimes, no fees at all.
Remortgage borrowers may be liable for the following fees and taxes…
- Legal fees: Typically around £300, payable to your lender
- Arrangement fees: Either a fixed amount or a percentage of the loan
- Booking fees: Usually between £100 and £500
- Valuation fees: Typically between £250 and £1,500, depending on the size and value of the property
- Early repayment charges: Will vary depending on the terms of your mortgage
- Land Registry fees: Between £20 and £910 depending on the value of your home
- Stamp Duty: Only payable if there is a need to transfer the legal title of your home as part of the remortgage. For example, moving a joint mortgage into a sole name mortgage, or adding someone to the mortgage (transfer of equity)
Although all of the above could add up to a hefty sum, it’s important to remember that many lenders will cover some of these fees and taxes as part of their remortgage package. Certain providers will throw in free legal costs, while others will cover the valuation fees, and some deals have no associated fees whatsoever.
Because they’re eager for your business, some lenders offer fee-free remortgage deals where the borrower has no legal costs, valuation charges or product fees to foot.
These products are generally geared towards customers with smaller loans because the savings made in upfront costs or added fees sometimes equate to more than a product with a better rate but a high fee.
Calculating the Tipping Point
If you opt for a fee-free deal, bear in mind that it’s likely to not also be the best rate on the market – the deals with the best rates tend to have fees. For every mortgage there will be a tipping point – the amount of borrowing for which it pays to get the better rate and pay a fee.
Borrowing £150k over 25 years on a 2-year deal…
- 1.5% fixed rate with £995 fee = approx. £600pm, = £14,400 + 995 = £15,395 total cost over 2 years
- 1.8% fixed with £0 fees = approx. £630pm, = £15,120 total cost over 2 years
- The higher rate fee free deal here is better by approx. £275
Compare this to borrowing £500k on the same 25 year mortgage…
- 1.5% fixed with £995 fee = approx. £2,000pm, = £48,995 total cost over 2 years
- 1.9% fixed with £0 fee = approx. £2,095pm, = £50,280 total cost over 2 years
- The lower rate with £995 fee here is better by approx. £1,285
Remember, every case is different so it’s important to speak to a whole-of-market advisor, like the ones we work with, to ensure you get the best deal.
Can I change my term when remortgaging?
In short, yes. Most lenders would be happy to negotiate a longer or shorter term when you’re remortgaging, providing you pass their affordability checks.
Age may also be a factor as some providers prefer the loan to be repaid by the time the borrower is 65. At others it’s 75 and up, as long as there’s proof of income post-retirement.
Moreover, many lenders are happy to discuss altering your term without the need for a remortgage, so taking out a new product might be unnecessary.
Can I remortgage a buy to let?
This is also a yes. Switching a buy-to-let mortgage rate to a better deal can make a big difference to the return on investment a landlord can expect, as without increasing rent, reducing cost is the main way of improving profit margins.
Letting to buy
Many lenders will also be happy to accommodate you if you’re planning on switching from residential to buy to let when remortgaging. You can read more on this in our article about let to buy applications here.
Do I need experience to be a landlord?
If you are thinking of remortgaging your main residence onto a buy-to-let mortgage, bear in mind that the maximum loan to value (LTV) for first time landlords is usually capped at 75-80% (some may consider higher), while an experienced landlord may be able to find a provider offering up to 85% in the right circumstances.
Can I get an interest-only remortgage?
Although some lenders are reluctant to offer interest-only remortgages, some providers may be willing, if you can prove you have an acceptable repayment vehicle in place.
These deals are often capped at 75% LTV (so on a 100k property you’d only be able to borrow up to £75k) and, in some cases, as low as 50%. The rates you will be offered by the lenders still offering these deals will depend on your repayment vehicle. The table below put this into perspective…
|Repayment Vehicles||Accepted By…||Notes|
|Existing Endowment Policy||Most Lenders||Usually go on middle projected figure|
|Stocks/Shares ISA||Most Lenders||Usually take 100% of balance|
|Savings in the bank||Few lenders||% of balance may be limited|
|Other Investment Bonds||Most Lenders||Usually take 100% of balance|
|Sale of this property||Few lenders||Usually required to have equity over £150k|
|Sale of another property||Most Lenders||Usually ok, often limited to 75% LTV|
|Pension Lump Sum||Few Lenders||Usually required to have a large lump sum|
Can I remortgage to pay off debt?
Once again, it’s a resounding yes. Many of our customers have remortgaged for debt consolidation purposes, taking their debts from high rates, low terms and high monthly payments, to low rates, longer terms and more manageable repayments.
For some with high debts and a decent amount of equity, this is a no-brainer, but the total cost will depend on your situation, how long you secure the debt for, the rates you get and the interest you’re paying. There’s a chance this could mean paying more over time, so it’s important to seek advice from an advisor to find out whether this is right for you.
What to do if you’ve been declined for a remortgage
As this article has already touched on, there are numerous reasons why somebody might be declined for a remortgage, but often bad credit is the culprit.
Going to some mainstream lenders with credit issues against your name can often be fruitless, and even damaging to your credit score.
What can I do if bad credit has caused me remortgage issues?
I’ve you’ve have had remortgage issues as a result of bad credit, don’t be disheartened. There are specialist lenders out there who deal with remortgage borrowers with poor credit, and the advisors we work with successfully arrange these every day.
Depending on what kind of adverse credit you have (a late phone bill payment is obviously less severe than a bankruptcy, for instance) and how long it has been on your file (the older the better), there may be a provider who is willing to offer you a remortgage lifeline.
What other remortgage problems can a broker help me with?
Other aspiring borrowers may have had remortgage problems because they are self-employed, an expat or a first-time buyer. Again, don’t be discouraged if you’re one of them, as there are lenders who specialise in these niche areas. To find them, you’ll need access to the whole of the market, and the brokers we work with have exactly that.
What happens on remortgage completion day?
Once all parties have agreed on a completion date, the mortgage funds will be requested and most lenders will need 5-7 working days to secure the funds.
At this stage, your solicitor will carry out checks with Land Registry to make sure that no entries have been made with them since contracts were exchanged, and Land Charges to ensure you aren’t bankrupt.
If any equity is being released, your solicitor will draft a Transfer Deed which must be signed by all parties.
On the day of completion, your remortgage funds will be sent to the new provider and they can formally redeem your previous agreement. The equity will be transferred once the lender has returned the signed transfer deed.
Should I remortgage or get a loan?
If you’re looking to raise capital through your property a remortgage may not be the only, or indeed the most cost effective, option available.
One of the most popular alternatives is taking out a second charge mortgage, also known as a homeowner loan, and if the borrowing amount is less than £25,000, some people opt for unsecured personal loans.
Remortgage or second charge loan?
A second charge mortgage (a.k.a Secured loan / homeowner loan) is loan secured against the equity of a property you already own.
Basically, it’s a mortgage on top of a mortgage, and may be a more sensible course of action for anyone who’s locked into a deal with hefty early repayment charges, or who wants to keep their current deal for whatever reason.
Other borrowers who are declined for a main mortgage may consider secured loans as a way of raising capital from their property, because the lenders tend to be more flexible in their criteria, offering loans to people with more severe credit issues, and more generous assessment of affordability, at times offer larger loans up to and above 10x income where main mortgages tend to be capped at 4-5x income.
Remortgage or personal loan?
A personal loan is not secured on a property, and thus your house would not be at risk if you failed to repay.
That said, rates, although attractive in recent years, tend to be on average higher than secured loan and mortgage rates. Also, they are usually capped at £25,000 in loan amount, and term cannot stretch past 7 years, meaning the monthly repayments may be higher than the same borrowing across a longer mortgage term.
If you’re unsure whether a secured loan or a remortgage is your best option, get in touch and the advisors we work with will discuss both options in detail.
FAQs – Additional information you need to know about remortgaging
If you have a mortgage on a house or a flat, you could well be in a position to grab yourself a cheaper deal with lower monthly repayments. Or take the opportunity to raise money for home improvements or to pay off debt. In other words, a remortgage could be just the thing for you.
We’ve helped hundreds of people remortgage, so here’s a brief FAQ on how to remortgage for a range of different circumstances.
We’ll cover such topics as –
- Loans v Mortgages
- Other alternatives to remortgaging
- Right to Buy remortgages
- Changing lenders
- Remortgaging as an expat
Is it better to get a loan or a remortgage?
If you want to remortgage and borrow more money, you will need to find a lender who is prepared to lend enough to pay off your existing mortgage plus the sum you want to raise. This could mean making higher monthly repayments over the full term of the remortgage, typically 25 years.
Your repayments will be determined by how much you are borrowing in relation to the value of your property (i.e. the Loan to Value (LTV)). Lower LTV mortgages carry lower interest rates.
Are there any other alternatives to remortgaging?
You might consider taking out a loan instead of remortgaging if your mortgage debt is low.
Below £50,000, you may well find the savings minimal once you’ve factored in fees you incur breaking from your existing mortgage. Some lenders won’t consider remortgages below £25,000.
You should speak to a whole-of-market broker about whether a secured or unsecured loan could be a viable alternative to think about.
You can apply for an unsecured loan with a bank or other lender. Often the loan period is 5 years and typically at a fixed rate, which means you know exactly what your repayments will be.
Hence with a fixed rate unsecured loan you can plan your budget. Just make sure you’re able to meet the higher repayments.
Are credit cards a viable option to remortgaging?
If you’re borrowing a smaller sum, say for less costly home improvements, you might consider other remortgage alternatives. You could use a credit card.
You can look to lower interest rate deals and take advantage of 0% introductory rates. A credit card will also give you some protection, means to claim back money, should you have any breach of contract issues with your builder. Make sure you can make at least the minimum repayments on your credit card balance each month.
I have some savings. Could I use those instead of a remortgage?
Savings offer the alternative to borrowing. You won’t have to pay interest on a loan, but equally putting money into savings is not such an attractive propositions when savings account interest rates are very low. And then there’s always the temptation to dip into savings to pay for other things.
You might consider putting your money into a savings account with higher interest rates where access to your money is restricted.
Could I use a second charge mortgage?
Many people know this type of loan as a second mortgage, secured loan, home owners loan etc. and it has some distinct advantages for those looking to release some equity from a buy-to-let property that they may have.
A second charge mortgage is a loan secured against the equity in your property, essentially giving you two mortgages.
You (or your broker) apply to the second charge lender as you would for any buy to let home loan mortgage. The lender will then need to value the property as suitable security and assess your application in terms of affordability, credit history, etc.
Can you remortgage if you have a secured loan?
Almost any property-owning individual can apply to remortgage with a second charge, so long as they have the equity (and income) required. It’s even possible to have 3rd and 4th charge mortgages if your situation warrants it.
What if my house increases in value?
It’s quite possible that the value of your property has increased since you first took out a mortgage on it. If that’s the case, then you will have more equity in your home.
It’s possible to use this increased equity to remortgage and borrow money at a cheaper rate or reduce your monthly repayments. That’s because the increase in the value of your home set against the sum total you want to borrow (i.e. what you are repaying now plus the sum you want to borrow) could make you eligible for a remortgage with a lower LTV.
Should I remortgage if my house value has increased?
To remortgage on the back of a house value increase, you will need to get your property valued to work out how much equity you have in it. This will in turn determine how much more you can borrow. You could ask your lender to do a valuation, though this will come with a fee.
If you’re remortgaging to take advantage of when your house value has increased, you might find a lender who offers a free valuation. And don’t forget, when you’re weighing up your options, to factor in any exit fees and early repayment charges on terminating your existing mortgage; and the administration fees on the remortgage.
Remortgaging to anticipate a house price increase that will continue to rise is a risky strategy. You can’t assume that the value will rise to justify taking out a bigger remortgage than you can afford right now. There’s no guarantee that property prices will always increase.
What’s involved in remortgaging A Right to Buy property?
The Right to Buy scheme helps eligible council and housing association tenants in England to buy their home at a discount.
Under the scheme, there is usually a pre-emption period, which stipulates that the tenant will have to pay back the discount to the council if they sell the property within 5 years of purchase.
People ask how does this impact on a Right to Buy remortgage? It doesn’t mean that the tenant can’t switch within the initial 5 years’ pre-emption period and remortgage to take advantage of lower interest rates. You won’t be penalised for shopping around to find a better deal.
Is It better to remortgage with the same lender?
We are often asked, ‘Is it easier to remortgage with the same lender?’ You can of course move to a better rate with your existing lender. Remortgaging with the same lender is called a product transfer.
There are advantages to doing this as you won’t usually require a solicitor to do any additional legal work. Hence you will save on legal fees.
Remortgage with the same lender and it’s likely you won’t be subjected to further affordability assessments or credit checks either. Unless you are borrowing extra money or making major changes to your mortgage.
This can be an advantage if your household income has decreased, your expenses have increased, or you have become self-employed since you took out your original mortgage.
Some lenders will require updated details on your circumstances, if you’re planning to remortgage with the same lender, so it’s best to check your mortgage provider’s policy.
A Product Transfer makes sense if by remortgaging with a different lender exposes you to ERCs. You would also avoid paying any Exit Fees charged when terminating your existing mortgage.
What about remortgaging with a different lender?
Remortgaging with a different lender gives you a greater opportunity of finding a better deal than choosing between a restrictive few offered by your current lender. The more equity you have in your home and the cleaner your credit, the lower your interest rate will be on your remortgage, potentially saving you thousands of pounds.
Lenders put out competitive rates to attract remortgagers. They recognise the discouraging costs of switching. And so some will offer incentives, such as free legal work and valuation reports.
Remortgaging with a different lender helps you use your money more effectively if you want to pay off a substantial chunk of your mortgage. It’s common for lenders to charge borrowers for overpayments.
So, if you’ve earned a sizeable bonus or inherited money, you could instead remortgage and use the money to shore up your deposit and take advantage of a remortgage in a lower LTV bracket with a lower interest rate.
Can you remortgage while on maternity leave?
It is possible to remortgage while on maternity leave. Most lenders will base affordability on your maternity leave income, which will be lower than your normal annual salary. They will then apply income multiples on your lower income to determine the maximum amount you can borrow.
If remortgaging when on maternity leave, there are some lenders who will base affordability on your full, normal salary if you can confirm that you will return to work within three months of your mortgage application and the date of your return. Also, on the condition that your income will then be at the same level or higher than when you took your maternity leave.
Is remortgaging while pregnant possible?
If remortgaging while pregnant, you will need to disclose this to your lender that you are planning maternity leave on applying for a remortgage. This satisfies the condition in the application that you notify the lender of a material change to your financial circumstances. Failure to disclose is considered fraud. Some lenders do not lend to borrowers on maternity leave.
Can I remortgage whilst on maternity leave if I’m self employed?
It is possible if you are self-employed, but it all depends on what impact your absence will have on the business. Mortgage companies are willing to lend if you have employees who can keep the business income stable while you are on leave.
If you have bad credit and you’re remortgaging while on maternity leave, it will be more difficult to switch mortgage products. Chances of success depend on the severity of the credit issues and how recently those issues such as bankruptcy, mortgage arrears or repossessions occurred.
You may be able to remortgage up to 85% LTV if you go through a mortgage broker. Lenders typically like to deal with brokers who can ensure applications are completed adequately and stand a greater chance of being accepted.
You might benefit from some free advice from one of the specialists we work with.
Is remortgaging as an expat posible?
Lenders will view your borrowing as higher risk if you’re remortgaging as an expat. This is because it is more difficult for the lender to establish a borrower’s financial stability when they are living and working abroad.
If your primary income is earned overseas, the lender may have difficulty identifying your employer and getting access to relevant information such as your credit history in order to process your application.
Is remortgaging from abroad as an expat possible?
They prefer, if you’re remortgaging from abroad, that you are employed by an international company in certain countries. If you’re self-employed, they may be concerned about the sustainability of your business. Whether employed or self-employed, the size of your income will be subject to fluctuating exchange rates.
Inform your lender if you change jobs while overseas. Some lenders have restrictions in place governing a UK expat remortgage, such as the type of employment they will accept, even if the pay in your new job is higher.
It’s a good idea to open a bank account and to order a credit card in the UK if you don’t already have them. Check with the bank that they will allow the account to remain open while you’re overseas.
Lenders require that you have a traceable UK address for the purposes of correspondence. You can propose the address of a close family member or your parents, somebody you can trust to pass on your mail.
You may need to pay a little extra in interest rates for a UK expat remortgage as a consequence of being a higher-risk borrower.
Can expats access buy to let remortgages?
Expats continue to capitalise on the rental market in the UK. Borrowers might want an expat buy-to-let remortgage to either get a better deal after they have left the UK; to release equity in an existing property in the UK in order to purchase another investment property; or release equity to buy a property overseas.
There are lenders prepared to lend on an expat buy to let remortgage. The lender will require a relatively larger deposit to protect themselves against any uncertainty in making income from the rent.
As an expat, your chances of securing a BTL remortgage will be enhanced if you have been employed abroad over a longer period of time.
What is A transfer of equity remortgage?
A transfer of equity is a change in legal ownership of a property. This may happen when one person is added to another’s mortgage, say when a couple decide to marry or cohabit, or alternatively when one person is released from the mortgage upon a partnership breaking down.
The transfer of equity can signal a good opportunity to remortgage and take advantage of a mortgage with a lower interest rate. Plus there is the opportunity to raise additional capital.
What’s involved in a joint remortgage?
You will have access to substantial borrowing collectively obtaining funds via a joint remortgage.
In most cases, a lender will require a credit check of all applicants taking out a joint remortgage. Each is checked for any credit issues they may have had with regards to IVAs, bankruptcy or mortgage arrears. Bad credit may restrict the choice of remortgage deals available to you.
Although the lender needs to be satisfied that the joint remortgage can be repaid, they are not interested in the proportions each of the applicants pay, just as long as the total repayments are met.
How can I raise a lump sum by remortgaging?
Homeowners can remortgage and raise a cash lump sum by borrowing against the equity in their home. Often the remortgage lump sum is used to pay for home improvements, to buy a second property or start a new business.
If you do raise a remortgage lump sum and end up borrowing more as a consequence, consider how you will repay the loan over the lifetime of your new mortgage. And of course you need to factor in all the fees involved in leaving your current mortgage and arranging a remortgage. They could eat into the equity in your home.
What are surplus funds with regards to a remortgage?
Any money you receive upon completion of your existing mortgage is called a ‘surplus of funds’. Your solicitor will oversee the payment and the transfer of funds.
What about lifetime tracker remortgages?
You might want to consider a lifetime tracker remortgage. Some people like the fact that a tracker mortgage follows the Bank of England base rate (BBR) and not the lender’s SVR. While the BBR is very low, tracker rates are too. This could change depending on how the economy fares in future. A lender, on the other hand, may change its SVR whenever it chooses for its own commercial purposes.
It’s worth checking out the lifetime tracker remortgage market. Lifetime tracker remortgages are simpler for lenders to design. As a consequence, they carry lower fees than fixed, discount or capped rate mortgages.
Am I protected if I remortgage my home?
If you fail to keep up payments, your home could be repossessed. But at least it’s reassuring to know that if you suffer any losses or receive a poor service from your mortgage lender that you are protected by the UK’s financial ombudsman service, the Financial Conduct Authority (FCA).
Talk to an expert advisor about remortgaging today
If you like anything in this article or you’d like to know more, call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry here.
Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.
Looking for specialist advice? Read through our articles about different types of remortgaging situations, and how best to prepare yourself to find the right mortgage for you.
Bad credit remortgages
Get a remortgage quote
Cheapest remortgage deals
Shared ownership remortgages
Secured loan Vs Remortgage
Debt consolidation remortgages
Remortgage to pay off debts
Remortgage to buy another property
Remortgage for Home Improvements
Costs of Remortgaging
Remortgage a Help to Buy Property
Remortgage to Release Equity
Remortgaging a Buy to Let
Remortgaging an interest only mortgage
Older age remortgaging
Remortgaging to a Buy To Let
Remortgage Income Types
Day One Remortgages