Remortgage

What is Remortgaging?

Remortgaging is the process of switching a mortgage to a different lender without moving homes. For
many borrowers, it is also the ideal opportunity to review their personal and financial circumstances and to consider whether their current mortgage and lender is the most suitable for them.

Reasons to Consider a Remortgage
  • Your current deal is about to end.
Many of the best mortgages only last a short time – often two to five years – the typical length of time offered on a fixed rate, tracker or discount mortgage.

When it comes to an end, your lender will put you on its standard variable rate (SVR). It’s likely to be higher than your old interest rate and higher than the best buys available. If so, you want to be ready to remortgage to a cheaper rate. Speak to your broker around 12 weeks before your rate ends, or when you receive a letter advising you that your deal is ending.

A good broker will look at what your existing lender will offer you, but also look at the 'Whole of the Market' to see what offers best value.

  • You want a better rate.

If you are tied into an initial deal then you might have to pay an early repayment charge which can be large, 2-5% of your outstanding loan. Plus, there is usually a small exit fee (it might call it an 'admin fee' or a 'deeds release fee') when you repay any mortgage.

This doesn’t mean you shouldn’t consider it as you could still potentially save money. (especially if you have a large amount of mortgage debt). You just need to do do your calculations carefully, to ensure it's the right thing for you to do..

  • Your home's value has gone up.

If the value of the property has risen rapidly since you took out your mortgage, you may find you’re in a lower loan-to-value band, and therefore eligible for much lower rates. Again, you need to do your sums but it’s definitely worth a look.

  • You're worried about interest rates going up.

If your on your lenders Standard Variable Rate, then your rate can fluctuate up aswell as down. If you don't mind tieing yourself into a Fixed Rate and you want the security of knowing that your payments cannot increase, then this is a sensible option.

  • You want to overpay & your lender won't let you.

Perhaps you’ve had a pay rise or maybe you’ve inherited some money. You now want to pay extra but your current deal won’t let you or it will only let you make a small overpayment.

A remortgage will allow you to reduce the loan size and potentially get a cheaper rate as a result. But watch out for any early repayment charges or exit fees you face, and compare this to how much you'd save with the new, lower mortgage.

  • You want to switch from interest-only to repayment mortgage.

You shouldn't actually need to remortgage to do this, your lender should be happy to make the change for you.

You can even change part of the loan to capital repayment and leave some on your interest-only deal, which is particularly useful for anyone with an underperforming endowment mortgage which is expected to result in a shortfall at the end of the term.ing 

Having said that, it's still worth talking to your Mortgage Adviser, to make sure that you are on the best rate that you can be.

However, it's a totally different story if you want to change from capital repayment to interest only - expect your lender to be difficult if you try to do this.

  • You want to borrow more.

Perhaps your current lender has said no to lending you extra money or the terms it's offering aren’t very good. Remortgaging to a new lender might enable you to raise money cheaply on low rates. But remember to take all the fees into account to see if it really is cheaper than other forms of borrowing.

The new lender will ask you what the extra money is for. Surprisingly, it is likely to be more comfortable with you borrowing the money for a new car than for business purposes. Not so surprisingly, it won’t want to lend you money to start a new business….

The most commonly acceptable reasons to raise money are for home improvements and paying off other debts. Just be prepared for your lender to ask for evidence if you are borrowing a large amount, e.g. builder quotes, or proof that you have paid off the debts.

  • You want a more Flexible mortgage.

Maybe you want to be able to miss a payment. Changing jobs, going back
into education, going travelling – whatever the reason, there are mortgages which will let you take payment holidays.

Or maybe you’ve been tempted by offset mortgages which combine your savings or current accounts with your mortgage.

Whatever flexibility you want in a mortgage, chances are it’s out there. But remember products don’t offer flexibility for free. Expect to pay for flexible features with a slightly higher interest rate. So don’t be tempted to go for bells and whistles unless you will actually use the

What if you want to stay with your current lender?

If you wish to stay with the same lender when your current deal comes to an end, then we can simply complete a product transfer. This means you will be placed on a new product with your existing lender. We can look at this for you and advise accordingly.


If it sounds like remortgaging could be the right move for you, contact us for a no obligation chat. Remember, we don't charge Broker Fees and we search the 'Whole of market'. Use our knowledge of the different lenders and products that are available.
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