How to Remortgage
Everything you need to know about Remortgages and how a mortgage broker can help you secure the best rate
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We’ll explain all the different reasons people choose to remortgage, what steps you need to take and why using an experienced remortgage broker is the smartest route to finding the best available deals.
In this article:
- How do remortgages work?
- How much can you remortgage for?
- How to remortgage your home
- What fees to expect when remortgaging
- How soon can you do it?
- Remortgaging to release equity
- Remortgaging when your circumstances have changed
- Should you stick with the same lender or switch?
- Refinancing a property you own outright
- Buy-to-let and commercial remortgages
- Alternatives to consider
- Get matched with a remortgage specialist
What does remortgaging mean?
Remortgaging is where you move your mortgage on an existing property from one lender to another. This typically happens when a current mortgage deal has reached the end of its term and you’re now free to consider other options without paying any early repayment fees.
The aim is to get the best possible interest-rate deal available at the time, based on your specific circumstances and requirements.
How do remortgages work and is it easy to do?
You can remortgage any property you own, including a home you own outright or where you have an existing mortgage. When you remortgage you simply take out a new loan equivalent to the amount you owe on your existing mortgage, and pay off the original debt with the proceeds.
You also have the option to release equity in your home by borrowing more money when you remortgage, freeing up extra cash for other purposes.
The remortgaging process is similar in a lot of ways to taking out a new mortgage from scratch, in that you still have to show that you can afford your repayments, have a good credit record and meet the lender’s eligibility criteria.
If you tick all of these boxes then the process can be very simple. If it’s more complex – perhaps because of a bad credit issue that’s occurred since you took out the mortgage – then it may be more difficult.
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 very 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).
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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.
Our remortgage calculator can tell you what your new loan-to-value (LTV) ratio and repayments will be after you've remortgaged, with or without releasing equity from your property.
After you have remortgaged your new LTV ratio will be and your new mortgage payments will be as indicated below…
New Monthly Repayments:
Get started with an expert broker to find out how much they can help you save on your remortgage.
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.
How to remortgage your home
If you don’t currently use a mortgage broker, your first step should be to make an enquiry with us so we can match you with a specialist remortgage broker. This will boost your chances of getting approved for a remortgage and securing a favourable interest rate. Your broker will then guide you through the following steps:
- Calculating your loan to value (LTV) – this is the difference between your outstanding mortgage balance and current property value
- Downloading and optimising your credit reports – follow the steps in the article link here for a free trial and gain access to your credit records straight away.
- Finding the right lender for your remortgage requirements – Your broker will save you a lot of time and, potentially, some money too by identifying the lenders offering the best remortgage deal
- Completing all the necessary remortgage paperwork and gathering the correct documentary evidence needed – to ensure nothing delays or hinders your application
Locking 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 with mortgage lenders to lock in a rate deal ahead of this date so you don’t miss out.
How long does it take?
The whole process should take around 4-8 weeks, depending on your circumstances, and if you’re switching lenders then 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
Take a look at our rates table below to get an idea of the current remortgage deals on offer.
Looking for more rates and deals?
We can match you with a mortgage broker who can provide you with up-to-date bespoke rates and deals from across the entire market.
Last updated December 2023
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 to expect when remortgaging
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 either upfront or added to the loan. Arrangement fees average around £1,000 – £2,000. Some lenders charge an additional non-refundable booking fee on top of this of £100-200. Sometimes though, there isn’t a fee to pay.
- Legal fees and valuation: Both of these expenses are often covered by the new lender 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 brokers may ask for part of the fee upfront, if its 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 then 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 to an early repayment charge to cover the admin involved in ending the mortgage and switching to a new provider.
A broker should be able to give you an overview of all of your costs before you commit so that you’re confident you can afford to remortgage.
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How soon can you do it?
In theory you can remortgage at any time and although most lenders will not consider remortgages within six months of first moving into a property, there are a few who will. It’s likely you’ll need your solicitor to confirm you’re the true owner of the property as the title deeds may not have been legally transferred by this point.
There may be some cases where it makes 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?
Just as with a standard mortgage application, you will in theory need a deposit but this normally takes the form of the equity you already have in your property. For example, if you want to borrow £150,000 but your house is worth £200,000 then this equates to a 25% deposit or 75% loan to value (LTV).
Remortgaging to release equity
While many people remortgage simply 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 the cash in your home isn’t without conditions and there are some things that you’re not usually eligible to remortgage. For example, investing in stocks and shares or business investments may not be permitted by some lenders.
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 about if your situation is different to 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:
Becoming self-employed, changing jobs or taking a salary cut could all affect your ability to remortgage if they have an impact on affordability. If you’ve become self-employed since getting your mortgage then a new lender will want to see different documentation – tax returns or self-assessment certificates instead of payslips.
Remortgaging to consolidate debt is quite common, but if your debt has gotten out of hand since your original mortgage and caused some issues with your credit report then this could impact the remortgage deals you’re eligible for.
Don’t panic though, remortgaging with bad credit isn’t impossible, and a broker who specialises in bad credit will have relationships with niche lenders who’ll be more sympathetic to your situation.
If you’ve separated from a partner you’ve previously had a joint mortgage with then 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 will have been 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 sure you make the switch properly.
Should you stick with the same lender or switch?
This decision very much comes down to your personal circumstances and the products on offer at the time. Technically, switching with the same lender isn’t actually a remortgage, it’s a product transfer, but it does sometimes make things simpler and quicker and cut out 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 at all. The key thing is making sure you’ve got the very best interest rates you can, and normally this is very hard to know for sure without the help of a mortgage broker. There are often deals available away from the high street that only your broker would be aware of.
Not having ‘proof’ of my new salary was a massive roadblock and one I did not expect.
But thankfully, I discovered Online Mortgage Advisor! I filled in their form and desperately hoped they could match me to a broker that was able to help me. It felt like my last chance.
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 very competitive rate.
In effect, you have 100% equity in your property and so should have access to a large number of interest rate offers. It’s important though to calculate exactly how much you need to borrow as the best offers are linked to lower LTVs (typically 50% or below). Click on the link in the paragraph above to find out all you need to know about unencumbered mortgages and how to get one.
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 to fund the purchase of another buy-to-let property. You’ll need a broker who specialises in more commercial and buy-to-let remortgaging but they’ll be able to talk you through exactly what you’ll need in place to secure your loan.
Alternatives to consider
If your considering a remortgage to release equity then it’s worth exploring other options depending on how much money you need and how quickly.
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.
If you’re over 55 then you could look at a specific equity release mortgage as an alternative to remortgaging. These products can often be expensive but they could make more sense depending on your situation. A broker can advise whether or not they might be a good fit for you.
Bridging finance is expensive, but is much quicker to arrange than a remortgage and offers more flexibility, so it might be right for you if you need cash flow quickly and for a short period e.g. to fund a house purchase or renovation while you’re 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 definitely not something you want to go at alone. One of the main reasons for remortgaging is to save money on a better deal, so it makes complete sense to go for a broker who specialises in remortgaging and will be able to deliver those savings.
Give us a call on 0808 189 2301 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 who has exactly the right experience to get you the best possible deal.
Speak to a remortgage expert
Maximise your chance of approval with a broker who's a specialist in remortgages
There’s no limit to the number of times you can remortgage, so many people choose to do it whenever it makes financial sense. Normally this is at the end of a fixed rate period if you can find a more competitive deal with another lender. It might not always work out cheaper, but it’s always worth using a broker to shop around just to make sure.
Yes, of course. It may be slightly trickier as not all mortgage lenders participate in all of the different government schemes available. This is definitely a situation where a mortgage broker can make all the difference as they’ll be able to identify the right lenders who can help and, more specifically, highlight the ones offering the best remortgage deals.
Yes, a mortgage lender will need to know the current value of the property you’re looking to remortgage so they can understand your loan-to-value before they can confirm how much you can borrow.
Yes, most mortgage lenders will have a maximum age for applicants but this will vary from lender to lender. If you’re concerned that your age may be a factor the smart move is to contact a remortgage broker first, rather than approaching lenders directly.
They will be able to identify mortgage lenders who will accept applications from someone in your particular age range.
If you’ve been rejected the first thing is not to panic! It’s also not a good idea to try and apply blindly with new lenders straight away.
The best way forward from this point would be to find out why your application was rejected – so you can identify the issue – and then speak with a mortgage broker.
They’ll be able to help you resolve the specific issue that caused your application to be declined and then look for the right lenders who can cater for your specific needs.
No, not necessarily. If you feel confident enough – and have the time to spare – you can remortgage by yourself. However, a mortgage broker will already have the knowledge and insight at hand to help you find the best remortgage deals across the whole market – even those not generally available through online searches or with mainstream lenders.
A mortgage broker can also be invaluable if your application is more complex – for example, if you have new evidence of bad credit on your record or you’ve changed employment status since you originally took out a mortgage.
This is possible, but speaking to a local broker isn’t always necessary. Whether you live in London, Manchester, or even Chorley – the most important factor for a remortgage isn’t where the broker is based in the UK. What’s more crucial is dealing with a broker who’s experienced and able to find you the best remortgage solution available.