How to Remortgage

Remortgaging involves switching your existing mortgage to a new deal, using the same property as security. This can be done with your current lender or a new one.

This guide explains how to remortgage, covering the key steps and why working with an experienced broker can help you secure the best remortgage deal.

For tailored advice on unique circumstances like bad credit or releasing equity, start with our remortgage hub. It links to all related content and resources, including pages for bad credit mortgages and equity release, as well as our mortgage comparison tool to check current deals.

Why remortgage?

There are several reasons why you might remortgage your home; we’ve listed some of the most common below:

• End of your current deal: If you don’t find a new deal, you’ll be automatically moved to your lender’s standard variable rate (SVR) when your term ends. The rate is often higher than their other deals. By remortgaging, you might find a better deal and avoid going onto your lender’s SVR.
• Finding a more competitive deal: If you take out a tracker mortgage, your interest rate will increase or decrease in line with the Bank of England’s base rate. If the rate goes up, so will your monthly repayments. By remortgaging, you could find a more competitive deal or move to a fixed-rate mortgage where the interest remains the same for your term.
• Pay off your mortgage sooner: If you want to make overpayments on your mortgage but your lender won’t let you, remortgaging to a lender who can help you pay off your mortgage sooner.
• Consolidate debt: You might want to consolidate multiple debts to reduce your monthly expenses or to get a lower interest rate.
• Release equity: If your home’s value has increased since you took out your mortgage, an equity release could help you access this increase to pay for home improvements, for example.

When should I remortgage?

You can remortgage at any time, but the most common time is three to six months before your current deal expires.

This gives you time to look for another deal and have everything in place to avoid reverting to your lender’s SVR, which could see your monthly repayments increase.

You have three to six months to accept an offer from a lender. So, setting the process in action six months before your current deal ends is a good rule of thumb.

If you want to remortgage earlier, most lenders won’t consider remortgages within six months of first moving into a property. Some will. You’ll likely need your solicitor to confirm you’re the true owner of the property as, at this point, you may not have legally transferred the title deeds.

If you are committed to a fixed-rate term, usually two, three, or five years, leaving during this can be very expensive, as lenders will charge high early repayment charges.

In some cases, it may make sense to accept these charges and switch regardless, but it’s normally better to wait until you can switch without these penalties. A specialist broker can crunch the numbers and tell you what the most cost-effective option is.

Will you need a deposit?

Unlike a standard mortgage application, remortgaging is based on your home’s equity, so you typically don’t need a deposit. However, contributing an extra deposit may secure better rates due to increased equity. Evaluating your property’s value and financial situation is key to obtaining optimal remortgage terms.

For example, if you want to borrow £150,000 but your house is worth £200,000, this equates to a 25% deposit or 75% loan-to-value (LTV).

How do I remortgage?

The remortgaging process is similar to getting approved for your initial mortgage but with a few subtle differences.

Here’s a rough outline of the process:

1. Gather your documents: Before you remortgage, you’ll need to make sure you have all the documents you need to hand. These will include, but aren’t limited to, three months of bank statements (if you’re self-employed, you’ll need to provide the last two to three years of accounts), proof of ID, a P60 form, utility bills, and proof of address.
2. Find a new deal: Once you have all your documents in place, it’s time to start looking for a new deal. This can be with your current lender or a different one if they have more favourable terms. It’s a good idea to speak to a broker before committing to a new deal, as they can advise you on what’s best given your current circumstances and the economic climate.
3. Agreement in principle: When you’ve found a good deal, you can reach an agreement in principle, which will give you an idea of how much a lender will loan you.
4. Apply for a new deal: Once your agreement in principle has been accepted and you’re happy with the terms, you can make a full application. This will be much easier with an agreement in principle in place. If you get a product transfer with your current lender, the process will be much faster than applying to a different lender.
5. Property checks and valuation: After you submit your application, your lender will undertake a valuation on the property and check your credit history.
6. Conveyancing: Once you’ve received an offer, you have six months to respond. If you go ahead with the deal, you’ll need to hire a solicitor to complete the conveyancing process, such as updating the Land Registry and the financial and property information related to the new mortgage.

Here are a few more things to consider when remortgaging:

Lock in your rate early

If your existing deal term is coming to an end within the next six months, now is the time to speak to a broker about what current interest-rate deals are available. If you’re concerned that rates may go up before your current deal ends, it’s possible for mortgage lenders to lock in a rate deal ahead of this date so you don’t miss out.

How long does it take?

The remortgaging process should take 4-8 weeks, depending on your circumstances. If you’re switching lenders, you will need a solicitor. If you’re not doing anything complex with your remortgage, then the legal work involved is minimal, and many lenders will offer incentives such as including legal support for free when you switch to them.

What interest rate to expect

Look at our rates table below to understand the current remortgage deals.

How much equity is needed to get a remortgage?

Typically, you’ll need at least 5% equity in your home (the difference between its value and your mortgage balance) to remortgage. As the amount of equity increases, you may be able to access a wider selection of remortgage products. If you only have 5% equity, it’s imperative you speak to a broker before lodging any applications.

The best remortgage deals are usually available to homeowners with 20% equity or more. If you’re close to this amount, an independent broker will help you find lenders with flexible eligibility criteria or offer the best deals for a higher loan-to-value (LTV).

How much can you remortgage for?

Try our calculator below to work out what kind of remortgage deal you might qualify for. Include any equity you want to release, or leave this field blank if you aren’t releasing any.

The exact amount you can remortgage for will depend on how much debt, if any, you have outstanding on your property, the value of your property, your personal circumstances and specific lender affordability criteria.

Remember that these calculations are for illustration purposes only. A broker will be able to provide more accurate estimates for you.

Please note that the above rates were accurate at the time of writing but are always subject to change. Speaking to a mortgage broker is the best way to find the most up-to-date deals.

What fees will I have to pay to remortgage?

As well as the monthly repayments, there are some one-off costs that you’ll need to consider, such as:

• Arrangement fee: Payable to the new lender and can normally be paid upfront or added to the loan. Arrangement fees average around £1,000 to £2,000. Some lenders charge an additional non-refundable booking fee of £100-200 on top of this. Sometimes, though, there isn’t a fee to pay.
• Legal fees and valuation: The new lender often covers these expenses as an incentive for switching to them, so with the right product and help from a broker, you may not have to incur these costs yourself.
• Remortgage Broker fee: This could be a fixed fee (typically up to £500 for a straightforward application) or a percentage of the mortgage balance (between 1%-2% maximum). Some remortgage brokers may ask for part of the fee upfront if it’s a complicated application (for example, if bad credit is involved). The benefits of using a broker should outweigh the costs, either because they find you a better deal, save you significant time or manage to secure a remortgage in complex circumstances.
• Early repayment charge: If you’re remortgaging within a tie-in period on your existing mortgage, you may also have to pay early exit charges. This can be costly depending on the terms of your mortgage and often can mean it’s worth waiting before you make the switch.
• Exit fees: Some lenders may charge exit fees as a separate item from an early repayment charge to cover the administrative costs involved in ending the mortgage and switching to a new provider.

A broker should be able to give you an overview of your costs before you commit so that you’re confident you can afford to remortgage.

Remortgaging to release equity

While many people remortgage to get a better rate on an existing loan, others may decide to remortgage to release equity and take advantage of their home’s value increasing.

Remortgaging to release cash from your home comes with conditions, and there are certain things for which you may not be eligible to remortgage. For instance, some lenders might not allow you to use the funds to invest in stocks and shares or business investments.

Lenders may apply different maximum LTVs depending on what the money is going to be used for, but they will consider a range of purposes, including but not limited to:

• Home renovations or repairs
• A new car, motorbike, caravan or motorhome
• School fees
• Medical or legal bills
• Travel and holidays
• Buying a second home or holiday home
• Buying a freehold or extended lease
• Buying land
• Debt consolidation
• Some lenders will lend for, as they define it, “any legal purpose.”

Remortgaging when your circumstances have changed

Remortgaging if your finances are unchanged can be relatively simple, but what if your situation differs from when you took out the original loan? Can changes in circumstances stop you from being able to remortgage?

Different ways in which your circumstances could change include:

Work Status

Becoming self-employed, changing jobs or taking a salary cut could affect your ability to remortgage if they impact your affordability.

If you’ve become self-employed since getting your mortgage, a new lender will want to see different documentation – tax returns or self-assessment certificates instead of payslips.

Credit issues

Remortgaging to consolidate debt is quite common. If your debt has gotten out of hand since your original mortgage and caused issues with your credit report, this could impact the remortgage deals you’re eligible for. For free, impartial guidance on managing debt, consider contacting Citizens Advice for support and options before applying.

Don’t panic though, remortgaging with bad credit isn’t impossible. A broker specialising in bad credit will have relationships with niche lenders who’ll be more sympathetic to your situation.

Relationship status

If you’ve separated from a partner and previously had a joint mortgage, you might be looking to remortgage on your own.

The biggest issue with switching from a joint mortgage after separation is affordability, as your previous mortgage was based on two salaries rather than one.

On the flip side, perhaps you’re in a new relationship and want to remortgage as a joint mortgage. In either case, you’ll need to get expert advice to make the switch properly.

Should you stick with the same lender or switch?

Changing your mortgage provider is one option. Your decision depends on your circumstances and the products on offer at the time.

Technically, switching with the same lender isn’t a remortgage, it’s a product transfer, but it can sometimes make things simpler and quicker and eliminate the need for legal support.

On the other hand, most lenders will offer free conveyancing or cash back as an incentive to switch, so that’s often not a barrier to remortgaging with a different lender.

The key is making sure you’ve got the very best interest rates, and normally, this is very hard to know for sure without the help of a mortgage broker. Often, deals are available away from the high street that only your broker would be aware of.

Refinancing a property you own outright

If you own your home outright with no mortgage, sometimes called an unencumbered property, remortgaging can be even simpler as there is a very low risk to lenders, and you should be able to secure a competitive rate.

In effect, you have 100% equity in your property and should have access to more interest-rate offers. It’s important to calculate exactly how much you need to borrow, as the best offers are linked to lower LTVs (typically 50% or below).

Buy-to-let and commercial remortgages

Remortgaging is very common with buy-to-let and commercial mortgages as it’s a great way to raise additional finance for a business or fund the purchase of another buy-to-let property. You’ll need a broker who specialises in more commercial and buy-to-let remortgaging, and they’ll be able to talk you through exactly what you’ll need in place to secure your loan.

Alternatives to consider

If you’re considering a remortgage to release equity, it’s worth exploring other options depending on how much money you need and how quickly you need it.

Secured loans

A secured loan or second-charge mortgage might be a good option if you’re tied into a fixed rate term and remortgaging would be very costly. For smaller amounts under £25,000, for home improvements, for example, an unsecured personal loan might even be an option.

Equity release

If you’re over 55, you could look at a specific equity release mortgage as an alternative to remortgaging. These products can often be expensive but could make more sense depending on your situation. A broker can advise whether or not they might be a good fit for you.

Bridging loans

Bridging finance is expensive but is much quicker to arrange than a remortgage and offers more flexibility. It might be right if you need cash flow quickly and for a short period, e.g. to fund a house purchase or renovation while waiting for another property to sell.

Get matched with a remortgage specialist

Although remortgaging is a relatively straightforward process compared to a new mortgage, there are plenty of cost implications and potential hurdles to overcome, so it’s not something you want to go it alone.

One of the main reasons for remortgaging is to save money on a better deal, so it makes complete sense to choose a broker who specialises in remortgaging and can deliver those savings.

Call us at 0330 818 7026 or make an online enquiry, and we’ll have a quick chat about why you want to remortgage so that we can match you with a broker with the right experience to get you the best possible deal.