What is a remortgage?

Remortgaging means swapping your current mortgage for another one. You can remortgage with your current lender (called a ‘product transfer’) or move to a new lender.

Remortgaging to a more competitive deal could save you money, but it may also be possible to borrow more against the value of your home (called 'releasing equity').

Either way, your new lender will pay off your old mortgage. And you’ll start repaying the new mortgage with your new lender.

How does remortgaging work?

Remortgaging is generally simpler than getting your first mortgage. Here's what happens...

First, you'll want to find a suitable deal for your circumstances. You can do this by shopping around yourself or using a mortgage broker to compare the market for you.

Next, you'll need to apply for the mortgage and hope that the lender accepts your application.

There's generally less paperwork involved compared to getting your first mortgage.

Step 1: Check you're in a good position to remortgage

Whatever your reason to remortgage, you'll first want to make sure that you're in the right position to go ahead with it.

Is your credit score in good shape?

This will influence the competitiveness of the deals lenders will offer you. The higher your score the better.

If you have a low credit score, you might like to read our guide to Getting a mortgage with bad credit.

Lenders will also consider whether you’ve had any late or missed payments, defaults, county court judgements, for example.

Can you afford the charges or fees that might need paying?

If you're remortgaging before the end of your current deal's initial period, you may have to pay an Early Repayment Charge (ERC). This will be set out in your terms and conditions of your existing mortgage, and is usually anything up to 5% of the remaining mortgage amount.

You may also have to pay other fees (skip ahead to How much does it cost to remortgage?)

Has your home increased in value?

The more equity you have in a property, the more competitive deals lenders will offer you.

Imagine you took out a £180,000 mortgage on a home worth £200,000. The mortgage would amount to 90% of the home's value, otherwise known as 90% loan-to-value (LTV).

If you paid off £5,000 and the home increased in value by £5,000, the mortgage would be £175,000 of the £205,000 home. Or in other words, 85% LTV.

If you were to remortgage at this stage, you'd likely be offered more competitive mortgage deals that when you originally took out your 90% LTV mortgage.

Step 2: Find a suitable mortgage

It's recommended to start looking for a new mortgage deal between three and six months before the initial term on your current mortgage ends.

You can find remortgage deals by:

  • Asking your current lender

  • Using a comparison website

  • Speaking to a mortgage broker

Where to find a mortgage deal

Your current lender

Your lender can be a good place to start.

Remortgaging with the same lender is called a product transfer, and this can be a quicker process than remortgaging with a different lender.

However, considering only your current lender's deals can limit your options by 99% compared to checking the wider market.

Comparison sites

These sites can give you a good overview of what’s available. Once you select a deal, you’ll either be redirected to to apply directly via the corresponding lender, or to a mortgage broker who'll make sure it really is the right deal for you.

But comparison sites can be misleading. Lenders have certain criteria and these aren't taken into consideration through a comparison site.

Mortgage brokers

Brokers can provide tailored advice and find a suitable deal from a wide range of lenders. This can be particularly helpful if you have bad credit or are self-employed.

But bear in mind that some brokers will charge a fee, and not all brokers have access to the same range of lenders.* However, a small number of lenders (like First Direct) don’t offer mortgages through brokers at all.

*Trussle doesn't charge a fee, and has access to 90 lenders.

How to compare remortgage deals

Whether you speak to your current lender, use a comparison site, or a mortgage broker, here are some things to consider when comparing deals:

Loan-to-value (LTV)

The deals you’ll be offered will partly depend on your loan-to-value - the amount you’ll need to borrow in relation to the value of your home. Some lenders will go up to 95% LTV but your options will be more limited compared to a lower LTV.

Fixed vs variable rate

You can fix an interest rate for 2, 3, 5, 7, 10, or even 15 years. What you opt for depends on your circumstances.

You may have to pay an Early Repayment Charge (ERC) if you pay off your mortgage during the fixed-term period. So if you’re planning on selling your home soon, a shorter fixed term or a variable rate may be the better option.

If you’re going to live in your home for a while, a longer fixed term may give you the security that your monthly payments won’t change. Bear in mind that longer fixed term mortgages usually have higher interest rates, and you won't benefit from any changes to the Bank of England Bank rate.

Fees / true cost

A mortgage isn't all about the interest rate. There may be fees due upfront, and there equally may be incentives like cashback to take into account.

Comparing deals by true cost (monthly payments plus fees minus incentives over the deal's initial period) will give you a much better understanding of how competitive a deal may be.

Step 3: Apply for the mortgage

Whether you apply with a mortgage broker or directly with a lender, you'll need to provide information about:

  • your income and outgoings

  • any credit commitments such as loans

  • your current mortgage deal

  • your property such as its value

  • any dependents

  • any changes in your circumstances

  • proof of ID

  • bank statements

  • payslips

If you remortgage with your existing lender, they may not require any documents at all in some cases.

To view a complete list, read What documents do you need to apply for a mortgage?

Once you've provided your details and have agreed which mortgage deal to apply for, your application will be submitted to the lender.

The lender will consider your application based on whether:

  • you can afford the mortgage deal, including if rates were to increase (known as 'stress testing')

  • the mortgage deal is suitable for your circumstances, like if you planned on moving in the next few years

  • the property is in a suitable location and condition they're willing to lend on

In some cases you may be asked to provide more information, such as extra payslips.

The lender will either approve, defer, or reject your application.

If your application is approved, your lender will agree to:

  • pay off your current mortgage

  • set up your new one

  • get your property’s title deed

On your remortgage completion day, your new mortgage kicks in. You’ll start making repayments each month on the day you’ve agreed with your lender.

The first payment may be slightly higher or lower, depending on where the start date falls in the month.

You’ll have a 14 day cooling off period should you wish to cancel your mortgage agreement without incurring any penalty.

How long does a remortgage take?

You might have guessed, the time it takes to remortgage will depend on your circumstances. But it also depends on the lender. To be safe, you should consider starting the remortgaging process about 3 months before your current mortgage deal ends.

To see how long it takes Trussle customers to remortgage with different lenders, see our lender guides.

Why should I remortgage?

One of the most common reasons is to avoid lapsing onto your lender's high-interest Standard Variable Rate (SVR). Staying on the SVR could mean paying your lender up to £2,500 more in interest a year.(1)

But there are many other reasons you may want to consider remortgaging, from saving money to borrowing more money.

Remortgaging to save money

This is the most common reason to remortgage.

Lenders tend to offer a low interest rate for a fixed period (usually two to ten years) on new mortgages. But once this ends, you’ll move to their Standard Variable Rate(SVR).

The SVR is usually quite high, so being on it makes your mortgage more expensive. Research we conducted found staying on the SVR could mean paying your lender up to £2,500 more in interest a year.(1)

With interest rates still comparatively low in historic terms, now could be the perfect time to remortgage.(2) You could switch to a fixed-rate mortgage and lock in a low interest rate for two to ten years.

Think that rates will fall? A variable or tracker mortgage will probably also be cheaper than staying on the SVR, assuming rates don’t increase.

Remortgaging to release equity / raise capital

If you want to build an extension, turn your attic into a home office, or pay for a wedding, you could remortgage to raise the money (capital) for it.

This is also known as remortgaging to release equity.

How do I remortgage to release equity?

Equity is the property value minus the mortgage amount. So as you pay off more of your mortgage, your equity will increase.

You can release some of this equity by remortgaging your home. The equity will be added to your outstanding mortgage balance and you’ll need to pay it off again over the remaining mortgage term.

Remortgaging to consolidate debt

If you have several debts, remortgaging could make them easier to manage.

You’d release the equity from your home and use it to pay off your debts. As a result, you’ll only have one payment to make each month.

As a plus, mortgage interest rates are very low compared to historic standard. So paying off your debts this way could be cheaper than using a balance transfer credit card or debt consolidation loan.

That said, think carefully before going down this route and speak with a professional such as a mortgage broker for further advice. If you consolidate shorter-term debts like credit cards or loans to longer-term mortgage debt, you could pay more interest over the longer period of the mortgage - even though the interest rate might be lower.

Struggling with debt?

Speak to Stepchange or the Citizens’ Advice Bureau for free impartial advice.

Remortgaging to purchase a buy-to-let property

Rents in London hit all-time highs in December 2018.(3) But they’re also rising elsewhere in the UK. So it’s not surprising that more and more people are looking at buy-to-let properties - properties you buy specifically to rent out.

It’s not uncommon for borrowers to get an interest-only buy-to-let mortgage. It means that repayments are cheaper than those on a traditional mortgage because they only cover interest. The flip-side is that most lenders will ask you to put down a considerable deposit, typically around 25%.

If your home has increased in value or you’ve paid off a fair chunk of your mortgage, you could remortgage to release the equity. You could then use that money to pay the buy-to-let property’s deposit.

Let’s say you bought your home for £200,000. You borrowed £180,000 from the bank (90% loan-to-value) and paid the remaining 10% (£20,000) yourself.

Five years later, your home’s worth £250,000. You also paid £30,000 off your mortgage.

Since you now have £150,000 left on your mortgage and your property’s value has increased, your loan-to-value has reduced from 90% to 60%. As a result, you own 40% equity (£100,000).

Now, let’s say you’d like to buy a buy-to-let property worth £150,000. A 25% deposit would be £37,500.

You can raise the money for that deposit by remortgaging your home for £187,500 (75% of its value). £150,000 will continue paying for your home. And you could use the remaining £37,500 to pay the deposit on the buy-to-let property.

Of course, in five years’ time your home may be worth more. Or it may be worth less, which means you might not be able to release enough equity. You should also consider the following:

  • Since your repayments will only cover interest, you’ll have to find another way to pay the principal amount. You could use your rental income to overpay, or you could sell the property off when the mortgage is about to end.

  • As with any other mortgage, you’ll need to show your lender you can afford the repayments. That said, the affordability calculation is worked out differently. For a traditional mortgage, banks will look at your income and expenses. For a buy-to-let mortgage they’ll usually look at how much rental income you could make.

  • Because they look at potential rental income when deciding on your application, lenders may require you to charge at least a certain amount of rent. The idea is to create a buffer for those times when the property is vacant.

Remortgaging for flexibility

Remortgaging isn’t only about paying less or raising capital. More simply, you might want to find a deal that better suits your lifestyle and changing financial circumstances.

Saved up a sum of money?

You could switch to an offset mortgage and pay less interest.

Offset mortgages are linked to a savings account you might have, and means you’ll only pay interest on the remaining mortgage balance after the savings have been deducted.

For example, let's say you have £10,000 in savings and you want to remortgage to a £100,000 mortgage. With an offset mortgage, you’ll only need to pay interest on £90,000.

If your lender charged you 2% interest on the mortgage, you’d pay £200 less per year than if you took out a standard non-offset £100,000 mortgage offering the same interest rate.

Your savings aren’t used to pay off the mortgage, so they’ll still be there once your mortgage is fully paid off.

Received a promotion and can afford to pay off some or all of your mortgage sooner?

Some lenders allow you to pay up to 10% on top of your regular monthly repayments. Doing so will reduce the outstanding mortgage balance, and therefore the interest that would have been due on it too.

You could also simply pay off your remaining mortgage balance, also saving interest.

However, some lenders penalise overpayments and early repayment. If your current lender is one of them, you could switch to a deal that’ll let you do it for free. This could also incur fees, so seek advice from a broker to see if this is worth doing so.

When should I remortgage?

Those wanting to avoid lapsing onto their lender's Standard Variable Rate (SVR) deal should consider remortgaging between three to six months before the end of their initial period.

This will allow enough time to find a new deal and go through the mortgage application process, either through a mortgage broker or directly with a lender.

Remortgaging before the end of the initial period could incur an Early Repayment Charge (ERC), but it can make sense to pay it if the new deal saves you enough to outweigh the charge.

How soon can you remortgage?

If you’re still within your current deal's initial period (the first two years, for example) you may have to pay an Early Repayment Charge to remortgage.

You’ll need to start arranging a new mortgage deal at least 1-3 months before the current deal is running out to prevent lapsing onto your lender's Standard Variable Rate before your new mortgage is in place.

How much have you got left to pay?

While it's nice to move to a more competitive deal, there could be fees and other costs (such as arrangement fees and hiring a solicitor) associated with switching to a new deal.

If you don’t have much left to pay on your mortgage, these costs may cancel out any savings you stand to make.

And some banks won’t let you remortgage if you have less than £25,000 left to repay.

Have your circumstances changed?

If you've recently had a pay rise or have come into money through inheritance or by other means, you might be able to afford to pay more towards your mortgage each month or pay off a chunk of it in one go.

But you may find that your existing mortgage doesn't allow overpayments, in which case you might want to remortgage to one that does.

Similarly, you might find yourself with less money to spend or in need or raising money by releasing equity in your home.

Remortgaging to a more suitable deal might allow you to extend the term by an extra five years and bring down the monthly payments, for example. However, you’ll pay more interest over the longer mortgage term.

Do you have a bad credit history?

Lenders look at your credit history to find out how you’ve handled debt in the past. This tells them how much of a risk there is of you not keeping up with repayments.

If you’ve had trouble paying your debts or have a low credit score for other reasons, remortgaging may be trickier. It’s also unlikely that you’ll get the most competitive deal available. That said, you may still be able to find a remortgage deal.

To give yourself the best chance possible, follow these steps:

1. Check your credit report for any mistakes that could be harming your score

For instance, your report might state you missed a payment when you actually paid.

You can also add a note to your credit file if you had a good reason for missed payments, for example because you lost your job.

You can access your credit report for free using services like Experian and Equifax.

2. Take charge of improving your credit score

Steps you can take include getting on the electoral roll (if you’re not on it already), paying your bills on time, and avoiding using more than 50% of your credit limit.

For more tips to improve your credit score, read How to improve your credit score

3. Stop applying for credit

If you apply and get rejected, this will leave a mark on your credit report, which may worsen your score.

Instead, explain your situation to your lender or a mortgage broker. They’ll be able to advise you on your chances of getting accepted for a new deal.

Trussle looks at mortgages from more than 90 lenders, so we may be able to find a mortgage you could qualify for even if your credit history is less than perfect.

4. If your chances aren’t looking good, it may be best to wait things out

Missed payments, defaults, and other issues that harm your credit score stay on your report for six years.

If you’re close to the end of this period, it might be worth waiting for them to be removed from your report before applying for a mortgage.

In the meantime, you could work on improving your score to give yourself the best chance of finding a suitable remortgage deal.

How much does it cost to remortgage?

Remortgaging can cost anything between nothing and several thousand pounds. It depends on:

  • whether you remortgage before or after your initial period (will you pay an Early Repayment Charge?)

  • whether you stay with your current lender or switch to a new one (will they want a new valuation?)

  • the type of mortgage broker you might use (do they charge a fee?)

  • the mortgage deal you remortgage to (are there upfront fees to pay?)

  • whether legal costs are included or charged separately

Your new lender’s mortgage fees

Your new lender may charge you:

  • An arrangement fee, also known as the product fee. This covers the administrative cost of setting up your new mortgage.

  • A booking fee, also known as a reservation fee or application fee. This is usually around £100 to £200. You’ll need to pay this when you apply. You won’t be able to claim it back if your mortgage doesn’t go ahead.

  • A valuation fee, chaps fee (or funds transfer fee), or mortgage discharge fee.

A mortgage deal with a higher arrangement fee will usually charge a lower interest rate. By contrast, a lower arrangement fee will often accompany a higher interest rate.

If you have a large mortgage, it may be worth going for a higher arrangement fee in exchange for a lower interest rate. But if your mortgage is for a smaller amount, a lower arrangement fee and higher interest rate may work out cheaper in the long run.

You can also choose whether to pay the loan repayment fee upfront or add it to your total mortgage amount. Bear in mind that if you add it to the mortgage, you’ll be charged interest on it as it will be paid off over the lifetime of the mortgage.

In either case, you’ll want to compare mortgages against each taking into account the interest rate, fees, and incentives.

Read our guide on comparing deals by True Cost.

Valuation fee

A valuation helps lenders to check if the property meets their property criteria and whether the mortgage product selected is the correct loan-to-value.

Your lender can also sell off your home to get their money back if you miss repayments. For this reason, they’ll want to know how much your home is worth.

The valuation fee can be free or may cost around £300, depending on the lender.

Conveyancing fees

This is the cost of your solicitor.

A new lender may offer to pay for your solicitor. And if you remortgage with your current lender, you won’t require a solicitor.

Broker’s fee

Some mortgage brokers will charge a fee for their advice*. This can be a fixed fee or even a percentage of the loan. The amount varies but is commonly around £500.(5)

In most cases, you’ll only have to pay this if you apply for a mortgage with one of the lenders they suggest. That said, it’s best to check the broker’s terms and conditions beforehand.

*Trussle is completely fee-free to use.

Deeds release fees

Your current lender may charge a fee to release your property title deeds to your new lender.

The amount should have been made clear in your mortgage offer document. It’s worth checking to make sure you’re not being overcharged.

Other common remortgage questions

We speak with thousands of people about their mortgage every month. So you can imagine that we receive a wide variety of questions. Here are some of the most common ones that we haven't already covered...

Do I need a solicitor to remortgage?

This depends whether you’re switching lender when you remortgage.

If you stay with the same lender there’s usually no legal work involved, but it will depend on the lender.

But if you’re moving to a different lender, then there will be legal work required and you’ll need to recruit a solicitor to work on your behalf.

Do I need a conveyancer for a remortgage?

A conveyancer is a type of solicitor that works on cases involving property ownership. Unfortunately, the terms ‘solicitor’ and ‘conveyancer’ are often used interchangeably.

So as we’ve mentioned above, there’s no need to find a conveyancer if you’re sticking with your current lender when remortgaging.

But if you’re switching to a different lender, then the legal work involved means you’ll need to hire a conveyancing solicitor to work on the case for you.

Is there a credit check when remortgaging?

There are two types of credit checks - soft checks and hard checks. Too many hard credit checks can damage your credit rating whereas a soft credit check won’t, regardless of how many you have.

  • A soft credit check will show lenders some (but not all) of your credit report information.

  • A hard credit check involves the lender taking a full look at your credit report. Such a check is unavoidable when you’re applying for a mortgage and you’ll only be hard credit checked once you’ve applied for the mortgage.

When remortgaging, if you’re remaining with your current lender there’s no requirement for them to carry out a new affordability assessment or credit check, so long as you’re not borrowing extra money or making any major changes to your loan - such as changing the mortgage term or type of mortgage.

If you’re considering switching to a new deal through a broker, they’ll run a soft credit check which won’t impact your credit score. When the mortgage has been fully submitted to the lender, they’ll run a full credit check before making their final decision. There’s no avoiding a credit check if you remortgage with a new lender, because they have to see your credit history and details of past payments. Remortgaging with your existing lender may not require a credit check, however.

Can I remortgage with bad credit?

If you have an adverse credit record, you may still be able to find a remortgage deal.

In fact, some lenders cater specifically for borrowers who have the odd black mark on their credit record.

But these specialist lenders are often not household names, and you’ll only be able to get hold of one of their deals by using a mortgage broker.

They’ll still check your finances to make sure you can afford the loan, and the interest rates charged will usually be higher than for those borrowers with a perfect credit history.

Can I transfer my mortgage to another property?

You may be able to take your current mortgage deal to a new property through a process called porting.

You’ll effectively be re-applying for the deal though, and the lender will want to run checks to make sure you can continue to afford the loan.

If your circumstances have changed, or you’re asking for a larger loan (perhaps because you’re buying a bigger home) then you may be declined.

Does a secured loan affect remortgaging?

If you are remortgaging to a new lender or looking to increase the size of your loan, then the lender will want to assess your finances to make sure that you can afford the repayments.

Having a secured loan against the property means that you’ll have another set of repayments to clear each month, besides the main mortgage. This may mean a lender is more restrictive about offering you a deal.

As a result, you might want to focus on clearing the secured loan before remortgaging.

Can I remortgage a house I own outright?

Yes, you could depending on your circumstances.

This is an unencumbered property, and there are plenty of reasons you might want to do so. You may want to release money to use on a deposit for another property, or help pay for renovations, for example.

Depending on the lender, they may class this is as purchase or a remortgage.

Can I remortgage using a government scheme?

There are no specific government schemes to help you remortgage, but you can remortgage a property you originally bought using a government scheme.

So you could remortgage a home you bought using the Help To Buy Equity Scheme, Lifetime ISA, or Shared Ownership scheme.

Remortgaging a Shared Ownership property often happens when a borrower wants to increase their share in the property - known as staircasing.

Do I pay stamp duty on a remortgage?

Stamp duty is only paid when ownership of a property is transferring to someone new.

When you remortgage, you’re simply raising money against a property you already own. So no stamp duty is charged.

Should I get my house revalued before remortgaging?

A lender will organise a valuation as part of the remortgage process.

However, you may wish to get one in advance so you have a clearer idea of how your outstanding mortgage compares to the value of the property.

As the loan-to-value (LTV) reduces over time, you could qualify for more competitive deals.

What happens if I can't remortgage?

There are a few reasons you might not be able to remortgage:

  • The value of your property may have decreased, leaving you in negative equity (where the size of your outstanding mortgage is bigger than the value of the property)

  • Your credit record may have worsened, meaning a lender is unwilling to offer you a new deal

And there are a few scenarios that could then happen:

  • Your lender might allow you to take a ‘payment holiday’, allowing you a period of time (usually a few months) to improve your circumstances

  • You might lapse onto your lender’s higher-interest Standard Variable Rate (SVR), and your monthly payments could increase as a result

So long as you keep up with your repayments, your home won’t be repossessed. And over time, as the value of the outstanding mortgage reduces or your credit record improves, you may then be able to remortgage to a new deal.

If you can’t afford your repayments, then it’s possible that the lender may seek to repossess your home. However, lenders are legally obliged to do this as a last resort after all other options have been explored.

Remortgaging with Trussle

It takes less than a minute to find out whether you could save by remortgaging to a more suitable deal with our remortgage calculator. If you could save, it takes just a few more minutes to complete your Trussle profile in order to receive a personalised mortgage recommendation - far quicker than using a traditional broker, comparison site, or going direct to lender!

We’ll then manage the application process, keeping you informed at every step of the way. We’ll even continue to monitoring your mortgage once secured, so you never pay more than you should.

With no paperwork or meetings to worry about, you’ll have more time available to spend doing the things you love. Start your remortgage now.

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Further resources

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Your home could be repossessed if you don't keep up repayments on your mortgage.

You may have to pay an early repayment charge to your existing lender if you remortgage.

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Making mortgage switching fairer for all

Just under half a million UK homeowners remortgaged £83 billion of loans during the 12 months to February 2019.(5)

But despite this, around two million homeowners are still collectively overpaying £10 billion a year by being on the wrong mortgage deal.(6)

Trussle is campaigning to help make switching mortgage simpler and fairer. Support the Mortgage Switch Guarantee.

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