Remortgaging - finding a new deal
Remortgaging is when you change your mortgage without moving house.
You can do this to save money, to change to a different type of mortgage - or to release equity from your home.
Although a mortgage is a long-term commitment – and probably your biggest single monthly outgoing – it often pays to switch products during the term of the loan, or when a deal with your lender ends and they offer a range of alternatives. If you’re coming to the end of a fixed-term deal, or have not reviewed your variable rate mortgage for a while, it’s best to investigate the alternatives up to six months ahead.
You might wish to extend the term of your mortgage to reduce monthly repayments (although this would mean it takes longer to pay off the loan and potentially cost more in total).
Or you could be looking to reduce the mortgage term – because by finding a cheaper deal and keeping your repayments the same you could be mortgage-free sooner.
You need to consider all the costs involved (and not just the interest rate) before you do it, as there are usually set-up fees involved.
You might also be tied into your current deal, especially if your loan is in its early years, so check with your lender.
Top tips on how to remortgage:
- Look at the reasons WHY you want to remortgage: is it to fix your monthly payments, pay more, pay less – or to release equity?
- Always talk to a mortgage broker or your current lender: They may have a new deal you don’t know about.
- Check on all the fees involved – including early redemption and legal fees.
- Ensure you can afford it: Could you cope if interest rates went up?
- Shop around. Find an independent mortgage broker to check a wide range of mortgages, not simply a small range of products.
There are a range of products available on the market. When you come to us for a mortgage, we’ll search over 50 banks and building societies to find a deal that is right for you and offer impartial advice. Here’s where you can find fixed-rate mortgages, tracker mortgages and discount mortgages.
Remember, a remortgage isn’t for everyone – and might actually cost you money.
- If you’ve only a small debt remaining, it might cost more in fees than you would gain in interest saved.
- You could be tied in to an existing deal with penalty fees if you leave. There may well be an early repayment charge on your current loan no matter how far into it you are.
- Your circumstances may have changed since you got your current mortgage and you may not get a new loan.
- Your home has dropped in value, affecting the size of the loan lenders are prepared to offer. It’s likely your home will be revalued before a new mortgage offer is made. This would be organised by the lender.
- There may be legal fees involved – so check with your potential new lender.
- See if you can avoid adding the arrangement fees to the debt, as they can be over £1,000, which you would be charged interest on over an extended period.
If you want to find a new deal because your existing one is coming to an end, or has already ended, changing your current mortgage is a straightforward process that could end up saving you money. If you’d like to discuss any aspect of remortgaging with us just get in touch. Our advice could end up saving you thousands of pounds.
Whatever your situation, if you have any concerns or just want to see if you can get a better mortgage rate please call our advisers directly on 0344 481 0013 or visit your nearest branch.
What are remortgage legal fees?
A solicitor or conveyancer is needed to carry out legal work involved in transferring your mortgage to a new lender. This can be organised by the lender.
Do I need a solicitor for a remortgage?
If you’re changing lender then legal work is required to remove the original lender's interest in your home and register the new lender – so the answer is “yes”. The good news is that most remortgages include a limited free legal package where your lender will select the solicitor.
What are the costs of remortgaging?
Our experts never base their advice solely on interest rates. Most products have at least one mortgage fee - the mortgage booking fee, valuation fee and the mortgage arrangement fee. But depending on the deal you choose you may not pay all or even any of these.
Arrangement or Product fee: Covers a lender's administration costs and can be in excess of £1,000. So it's a key part of the true cost of a mortgage, along with the interest rate.
Booking fee: Some lenders charge a mortgage booking fee to secure a fixed-rate, tracker or discount deal - it's sometimes also called an application fee or a reservation fee. You'll need to pay this fee (if your chosen mortgage has one) as soon as you submit your application. It’s non-refundable, so you won't get it back if you change your mind about your deal.
Valuation fee: Most remortgage packages give you this free. But if you have to pay it expect it to cost around £300-£400.
What’s an Early Repayment Charge?
An early repayment charge (ERC) is a penalty for repaying your mortgage (or overpaying more than is allowed) during a tie-in period, usually the length of time you’re on an initial deal. This includes switching from one mortgage deal to another. It is usually a percentage of the outstanding mortgage debt and it should reduce the longer you stay with it.
Can I get a remortgage for an extension?
Yes. Providing you meet your lender’s criteria to borrow extra money and meet the new monthly repayments. Lots of people borrow more for home improvements when they remortgage and an extra benefit is that you’ll probably increase the value of your home in the long term
Can I remortgage to buy another property?
Yes. Remortgaging may be a good way to fund either the deposit on a second property or even buy it outright. The property can either be a second home for yourself - either in the UK or abroad – or a buy to let. You may find that a remortgage works out cheaper than the specialist buy-to-let mortgages.
Can I remortgage with bad credit rating?
Banks and building societies will always check credit reports carefully to see if you have a poor credit rating as this may be the result of you missing debt payments in the past. They’ll also look for any County Court Judgments (CCJs) against you, or if you have ever filed for bankruptcy. But although a poor credit rating can be a major barrier to getting a mortgage there are specialist lenders who are prepared to help and there are even mortgages specifically designed for people whose credit history isn’t perfect.
Can I remortgage with the same lender?
You can – but it’s usually called a product transfer and not a remortgage. There are several advantages of taking out a new mortgage deal with your existing lender. Firstly you may be eligible for a preferential interest rate reserved for existing customers. Also, the process is more straightforward, with potentially lower fees, and can sometimes be completed online. Because we can search the whole of the mortgage market our mortgage advisers can give you advice on whether you’d be better off staying with your existing lender or switching.
How often can I remortgage?
It’s always a good idea to review your mortgage on a regular basis to see if changes in the market could benefit you and our experts are happy to help. Remember it’s not a cost-free process and your current mortgage may carry penalties or charges if you try to leave it early. There will probably also be costs associated with the new deal. Make sure all of this is factored into your decision and if in doubt, talk to us.
How much equity do I need to remortgage?
As a rule of thumb, the lower your LTV the better rate you are likely to secure. The majority of remortgage products are available up to 90% LTV.