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Remortgaging process
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How does remortgaging work?

Remortgaging is the structured process of moving your home loan to a new lender or securing a new product with your existing lender. It primarily works by having your new deal’s funds pay off the outstanding balance of your old mortgage. This journey, which can take an average of 4 to 8 weeks, begins with checking your loan-to-value (LTV) and ends with a legal transfer completed by your solicitor or conveyancer.

Remortgaging switching process

You’ve decided that remortgaging is the right step for your finances - whether it’s to secure

  • a better interest rate.
  • avoid the standard variable rate (SVR).
  • or raise capital for home improvements.

Now, let’s explore the process of how that home loan is completed. When you remortgage to a new provider, you aren't simply moving a balance like a bank account transfer; you are replacing one secured debt with another. This involves a precise legal and financial transaction:

  • 1. The redemption statement - this is the critical first step. Your solicitor or conveyancer contacts your current lender to request an official redemption statement. This document confirms the exact total amount required to close your existing mortgage account on a specified completion date, including the remaining balance of your loan, any interest you owe up to that specific day and any exit fees or charges for leaving your current mortgage deal early, also known as early repayment charges (ERC).
  • 2. The fund transfer - once all legal checks are satisfied, your solicitor requests the new mortgage funds from the new lender. On the completion day, the funds are transferred to your solicitor’s client account.
  • 3. Paying off the loan - this is the "magic" moment. Your solicitor uses the money from your new lender to pay your old lender every penny listed on that Redemption Statement. This officially closes your old mortgage account. If you were raising capital (borrowing extra for home improvements), your solicitor will send that leftover cash straight to you at this stage.
  • 4. Updating the official records - finally, your solicitor tells the Land Registry about the change. They "discharge" the old mortgage, meaning the old lender no longer has a claim on your house. Then, they register your new lender’s interest. This is why a mortgage is called a "secured loan", your home acts as the security for the lender. Remortgaging is simply the legal process of moving that security from one provider to another.

Your step-by-step remortgage journey

A successful remortgage requires careful planning. It is recommended starting the process 3 to 6 months before your current deal is due to end to ensure a smooth transition and avoid rolling onto your lender’s SVR.

What are the typical steps involved in the remortgage process

  1. The pre-application checklist

    Before you compare deals, you must know your financial standing:
    • Determine your LTV: Your loan-to-value ratio is key to unlocking the best rates. You can calculate this by dividing your outstanding mortgage balance by your property’s current market value, then multiplying by 100. The lower your LTV (e.g., 60% or 75%), the better the rates generally available to members
    • Check for ERCs: Review your existing mortgage agreement. If you leave a fixed or discounted deal early this can trigger an ERC, which sometimes is small, but sometimes it can cancel out the benefits of switching. So check first.
    • Review affordability: Lenders will perform an affordability assessment, looking at your income, credit history, and monthly outgoings. It’s useful to have documents ready, such as:
      • payslips.
      • bank statements.
      • tax returns (If you’re self-employed).

  2. Finding the right deal

    You have two primary paths to secure a new product:
    • Product transfer: Switching to a new deal with your current lender. This is often the quickest route, requiring minimal paperwork and typically avoiding valuation and legal fees.
    • Full remortgage: Moving to a new lender to find a more competitive product. We always advise you to compare both options, with the help of a qualified mortgage adviser, to see which provides the lowest total cost over the deal term.

  3. Application and decision in principle (DIP)

    Once you’ve selected a product:
    • Agreement in principle (AIP): This non-binding document, often obtained quickly, provides a preliminary indication of how much the lender is prepared to offer you. It uses a soft credit check and is not a formal commitment.
    • Formal application: You submit your full details and supporting documents. At this point, the lender conducts a hard credit check, which is visible on your credit file.

  4. Valuation and Underwriting

    The lender’s internal process begins to assess the risk of the loan:
    • Property valuation: The new lender arranges a valuation of your property to confirm the current market value and verify your LTV ratio. This can be a physical survey or a remote desktop valuation.
    • Underwriting review: The underwriting team meticulously verifies all your financial information, documents, and credit history to ensure the loan meets their lending criteria.

  5. Legal work and mortgage offer

    If the property and your finances are approved, the legal work begins.
    • Conveyancing: If you are switching lenders, a solicitor or licensed conveyancer is required for the legal transfer. Lender remortgage products can include free legal work, covering the basic costs of the conveyancing process for your benefit.
    • Formal offer: The lender issues the legally binding Mortgage Offer outlining the exact terms, fees, and conditions of your new loan. Your solicitor will review this with you to ensure its accuracy.

  6. Completion

    The final step is when the debt is formally transferred.
    • Funds drawn down: Your solicitor receives the new mortgage funds.
    • Old mortgage paid off: The solicitor immediately uses these funds to pay off the balance outlined in the Redemption Statement to your old lender.
    • New deal begins: The new legal charge is registered, and you begin making your regular mortgage repayments to your new lender. Any capital raised is transferred to you, and your new deal is officially complete.

Things to consider when deciding to remortgage

Understanding what else may crop up when remortgaging is essential.

Potential costs of switching

Fee type Description Key consideration
Early repayment charge A fee charged by your current lender for you leaving your deal early This is the biggest potential cost. It must be factored into your savings calculation before you decide to switch.
Lender arrangement fee A charge to secure the new mortgage product This can often be added to the mortgage balance, but remember you will pay interest on this amount for the term of the loan.
Valuation fee The cost of having your property valued for the new lender Many competitive remortgage products will potentially offer to cover this to attract members.
Legal/conveyancing fee The cost for your solicitor to perform the legal transfer of the charge. Often covered by the lender, but you may choose to pay for independent representation.

Important: Never focus solely on the interest rate. You must compare the total cost (interest payments and fees) of the new deal against the cost of staying on your existing mortgage (standard variable rate). Your mortgage adviser will be able to support you with this. 

What are the potential risks of remortgaging?

Remortgaging offers benefits, but it’s important to think about the potential downsides too.

  • Extending the term: If you remortgage to lower your monthly payments by extending the term, you will ultimately pay more interest over the lifetime of the loan.
  • Negative equity: If you borrow more and house prices fall, your mortgage could end up higher than the value of your home, limiting your future options.
  • Affordability issues: Changes in your income or credit circumstances could lead to your application being declined or qualifying only for non-competitive rates.

Who should I contact for independent remortgage advice?

Not sure which mortgage is right for you? We work with the Mortgage Advice Bureau, they compare thousands of products to find your ideal match. Complete our simple online enquiry form today and an adviser will reach out to offer personalised guidance.

Disclaimer: This information is meant to be a helpful starting point, not professional financial advice. Because remortgaging is a big decision, it’s always a good idea to double-check your plans with a professional mortgage broker or your lender first to make sure you’re getting the best deal for your circumstances.

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Frequently asked questions

Can I remortgage if I have a second charge on my property (like a secured loan)?

Yes, but it adds complexity. Your new mortgage provider will require a legal agreement called a “Deed of Postponement” from the provider of your second charge. This ensures the new primary mortgage lender retains the first-priority claim on your home.

Your conveyancer will handle this process, but it can lead to additional legal fees and extend the time to completion.

Can I remortgage to consolidate debts like credit cards?

Yes, you can. By raising capital through your remortgage, you can pay off high-interest personal loans or credit cards. The advantage is that you are replacing a high-rate debt with a much lower mortgage rate.

However, a word of caution: you are spreading that debt over a much longer term (e.g. 20 years), meaning you will pay interest on the consolidated debt for much longer, increasing the total amount you repay overall.

Do I need a solicitor if the lender offers 'free legal work'?

Yes, you still need a solicitor to handle the legal aspects of the transfer. The term 'free legal work' means the lender will cover the basic legal fees for the conveyancer they appoint from their approved panel. You can still opt to appoint your own solicitor, but you would be responsible for their fees.

How does remortgaging affect my credit score?

Applying for a new mortgage involves a hard credit check, which leaves a mark on your file. If you apply to multiple lenders in a short period, it can negatively impact your credit score. If your application is accepted and you meet your new repayment obligations, your score will improve over time. We recommend checking your credit report before applying.

I’m self-employed - will that make remortgaging difficult?

Not necessarily, but the process requires more documentation. As a self-employed member, you will typically need to provide at least two to three years' worth of certified accounts or tax returns (SA302s) to prove income stability.

Lenders must be confident your income is sustainable to meet affordability requirements.

What is a mortgage broker and how can they assist with a remortgage?

The simplest way to think of it is this: a mortgage broker is an independent financial expert who works to find the right mortgage for you.

They don't work for a single lender, like a bank or a building society. Instead, they look across the market to compare deals from lots of different providers, including us, Nottingham Building Society.

Here's exactly how they can help you with your remortgage:

  • They find the best deal for your unique life. We know that every member is different. A broker will base their recommendation on your unique financial circumstances, not just a standard set of criteria. They'll look past the flashy headline rate to make sure the mortgage genuinely fits your life.
  • They save you a huge amount of time. Hunting down and comparing remortgage products takes ages. Your broker does all the essential legwork, so you don't have to spend your evenings trawling through different options.
  • They handle the tricky stuff and the paperwork. Remortgaging can involve a lot of documentation. Your broker will help you get your application right the first time, ensuring everything is correct and ready to submit.
  • They talk straight about money. We aim to be refreshingly candid, and a good broker is the same. They’ll clearly explain terms and concepts without using alienating jargon. They're honest and upfront about all the costs involved, including any fees, so there are no surprises.

What is the difference between a remortgage and a product transfer?

A remortgage is when you move your mortgage to a new lender.

A product transfer is simply switching to a different product or rate structure with your existing lender. The latter is far less complex, faster, and typically avoids the need for a solicitor, valuation, and many administrative fees, making it a preferable choice if your current lender offers a competitive rate.

When is the best time to remortgage to avoid early repayment charges?

An early repayment charge (ERC) is a fee your current lender charges for leaving their specific product before its term has finished. If you remortgage during this period, you’ll have to pay that penalty, which can sometimes be thousands of pounds.

You need to act just before your current deal finishes. Most lenders will allow you to start the remortgage process, including securing a new rate around three to six months before your product's end date.

By starting early, you can:

  1. Secure a new rate: You lock in a competitive new deal from us or another lender.
  2. Time the completion: Your broker (or you, if you’re going direct) will arrange for the new mortgage to complete the day after your old product expires.

This process ensures you avoid the ERC and also avoid slipping onto the higher SVR for any period of time.