What is a remortgage?

A remortgage is when you swap your current mortgage for another one. You can remortgage with your current lender or choose a different one.

You might want to remortgage to:

  • get a better rate

  • get a deposit to buy another property 

  • pay off other debts

  • make home improvements

How to remortgage

It can take a few weeks to several months to remortgage, depending on your situation. 

It’s a good idea to start looking for a new deal about 4 to 5 months before you need one.

If you find a good deal, the lender will reserve it for you until your current deal ends.

See how long it takes our customers to remortgage with different lenders in our lender guide.

You may have to pay an early repayment charge (ERC) if you remortgage before the end of your initial period. 

This would be a percentage of your current mortgage balance. The amount is set out in the terms and conditions of your mortgage.

Speak to your lender if you do not know how much you’d have to pay.

It may be a good idea to wait until your deal is about to end before you remortgage.

If you remortgage with your current lender, they may not check your credit history.

This would only be the case if you were not borrowing more or changing something important, like the length of your mortgage or the type.

Otherwise, a lender will look at your credit report. Your credit report or file is a detailed record of your credit and debt history.

It includes things such as missed debt repayments, and how much credit card and loan debt you have. 

Your credit report helps a lender decide whether to give you a mortgage. 

It’s a good idea to look at your credit report before you remortgage. If you apply and the lender turns you down it will affect your credit history. This could make it harder to get a loan in the future.

Learn more about credit reports and scores in our credit score guide

You can check your credit report for free by contacting a credit reference agency (CRA).

CRAs include:

  • Experian

  • Equifax

  • TransUnion

If your credit report does not look good, consider improving it before you remortgage.

Find out how to improve your credit score in our bad credit mortgage guide.

You’ll get a better mortgage deal the more equity you have in your home.

Equity is the value of your home minus how much you owe on your mortgage.

Your home might have gone up or down in price since you bought it. Ask an estate agent to value your home or check a property website.

This will give you a more accurate figure to use when you look for deals.

You can find remortgage deals by:

  • asking your current lender

  • using a comparison website

  • speaking to a mortgage broker

Remortgaging with your current lender

It can be quicker to remortgage with your current lender, but you could miss out on a better deal elsewhere.

Using comparison sites

A comparison site can give you a good idea of what deals are on the market.

Bear in mind that you might not be able to get the deal you choose as it will depend on your situation and the particular lender.

The benefits of brokers

Brokers help you decide what type of mortgage you need, then find the right deal for you.

Some work with many lenders so they're able to choose from lots of different deals. At Trussle, we work with more than 90 lenders, for example.

Brokers are really useful if your situation is more complicated. For example, if you have bad credit or are self employed. 

A few lenders, like First Direct, do not offer mortgages through brokers.

Some brokers charge a fee. Trussle is fee free.

When you need a solicitor

You do not need a solicitor or a conveyancer for the legal side of things if you remortgage with your current lender.

You will need a solicitor if you move to a different lender.

Some lenders will use their own solicitor, and not charge you for it, or offer you cashback if you want to use your own.

Learn all about remortgaging with Eva, a Trussle mortgage adviser

Reasons to remortgage

By shopping around, you might find a mortgage deal with lower monthly payments.

You could switch from a variable rate to a fixed rate mortgage for stable monthly payments.

Some mortgage deals offer a lower interest initial period.

When that period ends, you may be able to get a better deal by remortgaging.

Some mortgages are more flexible, which may suit your current needs. An offset mortgage lets you offset any savings interest against mortgage interest.

Interest rates on mortgages are usually lower than those on credit cards and other loans. So it may be worth combining other debts into your mortgage.

It’s not always a good idea to do this, however.

You might get a lower rate, but if you increase the length of time you pay back the loan it could cost you more in the long run.

Discuss your options with a mortgage broker or financial adviser before you make a decision. 

If you’re considering home improvements, remortgaging can help you get extra funds.

Making improvements that add value to your home could also be a good investment in the long run.

Increasing your mortgage balance is likely to increase how much you pay each month and decrease the equity in your property.

So speak to your mortgage broker to find out if this is best for you.

If you need to free up some capital, you could release some equity in your home by remortgaging.

You can then use the funds for things such as helping your children with a house deposit of their own.

Increasing your mortgage balance is likely to increase how much you pay each month and decrease the equity in your property.

So speak to your mortgage broker to find out if this is best for you.

If you get a pay rise, or need more money for some reason, remortgaging could help you find a deal that's better suited to your new needs.

If you want to get a second home or a buy to let, you could remortgage to raise the money for the deposit.

Increasing your mortgage balance is likely to increase how much you pay each month and decrease the equity in your property.

So speak to your mortgage broker to find out if this is best for you.

Types of remortgages

Reasons you may want to remortgage your buy to let property could include to:

  • get a better rate

  • buy another property

  • improve your home

  • pay off other debts

  • switch to a residential mortgage

Remortgaging a buy to let property generally works in the same way as remortgaging your home.

Buy to let mortgages usually have a higher interest rate and fees than a residential mortgage.

Lenders will have certain conditions that you’ll have to meet, so it’s a good idea to speak to a mortgage broker.

If you’ve got bad credit you could have fewer mortgages to choose from. This means you might not be able to get the best rate. 

It’s a good idea to improve your credit report as a lender will look at it before deciding whether to give you a mortgage. 

Your credit report, also known as your credit file, is a record of your credit and debt history.

See how to improve your credit score in our credit score guide.

If you had bad credit when you arranged your mortgage with a more specialist lender, speak to a broker to see if you could get a remortgage with a high street lender.

Their rates are often lower, so you could get a better deal.

Equity is the value of your home minus how much you owe on your mortgage. 

When you remortgage to release equity, you switch to a new mortgage to get money from your property.

You might want some money to:

  • build an extension

  • pay for a wedding

  • put down a deposit to buy another property

The amount you take out of your property will be added to your mortgage balance so you can pay it back. 

How much you can borrow will depend on your own personal situation. 

Before you remortgage to release equity make sure it’s the best thing for you in the long run. 

Speak to a mortgage broker if you’re not sure about how much remortgaging to release equity will cost you.

If you want to buy another property, either for you or to rent out, you may be able to by remortgaging your current home.

You can switch to another mortgage to take out some of the money in your home. This can help you pay for the deposit for another one. 

Your mortgage repayments may go up if you’ll be borrowing more. 

If you’re planning to buy a home to rent out, you’ll need a buy to let mortgage. 

Find out more about buy to let mortgages.

Remortgaging for debt consolidation is when you take out some equity from your home to pay off unsecured debts like credit cards or personal loans.

Equity is the amount your home is worth minus what you still owe on it. 

The money you take out of your home is then added to your mortgage.

Moving your debt could cost less than using a balance transfer credit card or debt consolidation loan. 

It will depend on things like when you plan to pay off your mortgage. 

Speak to a mortgage broker or a financial adviser to make sure you’re making the right decision.

If you have a shared ownership home you may want to remortgage at some stage.

The two most common reasons to remortgage are to:

  • get a better interest rate

  • buy another share of the property

When you buy a shared ownership home, you buy between 25% and 75% of its value and pay rent on the rest.

If you remortgage and take out a larger loan you could buy more shares until you own your home completely. This is known as ‘staircasing’.

If you want to improve your home you may be able to use your mortgage to pay for it.

The money comes from the equity in your home. Equity is the amount your home is worth minus what you still owe on it.

You borrow the money from your home and add it to your mortgage. This means your monthly payments might go up.

When home improvements increase the value of your home

Remortgaging for home improvements can be a good idea. For example, having an extension built can be cheaper than buying a bigger house, especially when you consider stamp duty. 

If you want to take out a loan for home improvements, remortgaging is usually the cheapest way to do it. 

Some improvements could also make your house worth more. A loft conversion may cost £30,000 but could increase the value of your home more than that.

Some home improvements will not increase the value of your home and could even make it harder to sell. 

You might also not get the money back when you sell your home. 

It could be harder to sell a property if you add:

  • a swimming pool as not everyone wants to look after one

  • another bedroom without increasing the space downstairs 

Ask a local estate agent if your plans might increase the value of your home.

The best time to remortgage for home improvements

The best time to add the cost of home improvements to your mortgage is when:

  • interest rates are low

  • house prices are high, so it could be cheaper to extend rather than move

How to remortgage for home improvements

Speak to your lender or mortgage broker if you want to remortgage for home improvements.

Your lender will want to know what you need to borrow more money for.

They’ll see if you can afford it. They might do this by doing a hard or soft credit check, depending on their rules. 

Learn the difference between a hard and soft credit check in our credit score guide

You may be increasing your mortgage repayments for a long time, so make sure you can afford to.

If you need some money, you may be able to remortgage your home if you own it outright. 

You might need some cash for home improvements or to help someone get on the housing ladder.

Is it a mortgage or remortgage?

If you’ve paid off your mortgage, and do not have any other loans against your property, it is known as ‘unencumbered’. 

Some lenders offer remortgages if your home is unencumbered. Others offer new purchase deals.

Lenders look at your mortgage application in the same way for both cases.

If your home is unencumbered it may affect:

  • the rate you’re offered

  • incentives such as free valuations

Plenty of lenders

You’re likely to have more lenders and products to choose from if you remortgage and own your house outright. 

This is because the risk is lower for the lender. And paying off your previous mortgage shows you’re a responsible borrower.

Your lender will still look at your finances and credit record to make sure you can afford the mortgage.

An interest only mortgage is when you only pay interest on your monthly repayments. This means your monthly payments can be quite low.

You must have a plan in place to pay the loan at the end of your mortgage. It could be:

  • the sale of another property

  • savings

  • an endowment

  • investments

Often with mortgages you pay some of the interest and the loan in your monthly repayments.

If you remortgage, you can either get a better interest only deal, or switch to a repayment mortgage.

You’ll have a big choice of lenders if you’ve got an endowment policy. They often make an offer based on the middle projected figure in your endowment statement.

If you plan to pay off the capital with savings, or by selling your home, you’ll have a much smaller choice of deals.

How much you could save by remortgaging

See how much you could save by remortgaging with our calculator.

Compare remortgage deals

You can compare remortgage deals to find one that's right for you.

Remortgaging and coronavirus

Now may be a good time to remortgage as interest rates are at an historic low.

The Bank of England cut the base rate from 0.75% to 0.25% on 11 March 2020 because of the economic effects of the coronavirus. 

On 19 March 2020 the Bank cut the rate again to a new low of 0.1%, where it has remained ever since. 

See how coronavirus could affect you in our coronavirus guide.

You can still remortgage if you’ve been furloughed, but it may be harder.

You may not have to go through more affordability checks if you remortgage with your current lender. 

If you want to remortgage for a higher amount, your lender will need to check if you can afford the larger payments.

They might also check if it’s for the same amount.

You'll need to go through affordability checks if you remortgage with a new lender. 

A new lender will use your furlough income instead of your usual income when deciding whether to lend to you. 

Many lenders will not accept bonus or overtime pay if you’re furloughed. This’ll affect how much you can borrow. 

Read more in our coronavirus guide.

You're still able to remortgage even if you're on a payment holiday.

Taking a payment holiday shouldn't affect your credit score.

Find out more in our coronavirus guide.

How to know if you can remortgage

If you want to know whether you can remortgage the best thing to do is ask your lender or a mortgage broker. 

One of the most common reasons why you may not be able to remortgage is that you do not pass affordability checks.

You may also struggle to remortgage if you have a low credit score. The score is a reflection of how you have handled debt in the past.

Having negative equity can also prevent you from being able to remortgage. This is when you owe more on your mortgage than your home is worth.

If your lender says you can remortgage look at your mortgage details to see when your initial period ends or ask your lender.

If you have to pay an early repayment charge (ERC), which is a charge you pay if you end your mortgage early, it might make better sense to wait to remortgage until nearer the end of your initial period.

So if you want to remortgage early you can use an early repayment calculator to work things out for you. 

Otherwise speak to a mortgage broker.

If your mortgage has an early repayment charge (ERC) you’ll have to pay your lender a certain amount of money if you leave your mortgage before the initial period finishes.

You can find out the percentage by looking at your mortgage details or asking your lender.

Whether it makes sense to switch early will depend on how much you’ll have to pay and how much you’ll save by changing to another deal.

An early repayment calculator can work things out for you.

To be able to borrow more against your property you’ll need permission from your lender.

You’ll need to have enough equity in the property for the amount you want to borrow. Equity is the amount of the property you own.

Your equity can go up if the value of your property increases, so get your home valued by an estate agent.

You’ll also need to meet the lender’s rules. They’ll probably look at how you’ve handled credit in the past, your income and whether you can pay the higher monthly repayments.

How likely you are to get a remortgage will depend on your own personal circumstances.

A lender will look at your current financial situation as well as how well you’ve handled debt in the past.

They’ll also want to know what your home is currently worth compared to how much of it you own. This is known as the loan to value (LTV).

You’ll get cheaper rates for a lower LTV as the risk to the lender is smaller.

If you remortgage with your current lender you’ll save yourself the trouble of looking for another deal and having to give all your details again.

However, it’s still a good idea to look at deals other lenders are offering, just in case you find a better one than your current lender’s offering.

If you need any help, think about using a broker, as they have access to lots of different mortgages and can compare quickly for you.

We work with 90 lenders offering 12,000 deals, for example. We can also help you with a product transfer if that suits you best.

How much you can remortgage your house for

How much you can remortgage your home for will depend on a number of things.

A lender will need to make sure that you can afford it, so they’ll check things like your salary.

They’ll also want to know how much equity you have in your home. Equity is the amount your home is worth minus how much you still owe on it.

If you want to find out how much your home is currently worth ask an agent to come round and give you a valuation.

The more of your home you own, the better deals you’ll get.

If you want to know whether your property has gone up in value, look on property websites to see how much nearby homes similar to yours are on the market for. 

To get a more accurate figure, ask a local estate to come and value your home.

When you’re borrowing more money against your home, or looking for a new deal, it’s natural to worry about making an expensive mistake.

If you need some advice, a mortgage broker can help find the right mortgage to suit you and your situation. Some brokers, like Trussle, do not charge a fee.  

A financial adviser could also give you reassurance or advice.

When you’re making decisions about a mortgage remember that rates can go up or down.

The Bank of England base rate is currently 0.1%.

It dropped from 0.25% to 0.1% on 19 March 2020 to help control the economic shock of coronavirus, and has remained there ever since.

No one knows what will happen to rates in the future. If you’re worried about them rising, consider a fixed rate mortgage as your repayments will stay the same for the initial period.

Compare our best rates and deals currently being offered by lenders.

Remortgaging if you are unemployed

If you're unemployed you may still be able to remortgage to a new deal. But you’ll have fewer mortgages to choose from.

In most cases, you will not be able to change mortgage lenders if you're unemployed.

You may be able to switch to a new mortgage with your current mortgage lender. This is a product transfer. 

If you're going to lose your job you can speak to your lender about your options. You may be able to get a mortgage payment holiday.

Or find a mortgage with a lower interest rate using our mortgage comparison tool.

There are other ways to reduce how much you spend a month. You could check you're not paying too much for utilities such as broadband and energy.

You can always speak to a mortgage broker for some advice about your situation.

How to add or remove someone from your mortgage

If you want to add or remove someone from your mortgage, you’ll need to speak to your lender.

If you want to add someone, your lender will want to know their circumstances, such as their income and history of paying off debt.

If you want to remove someone, they’ll want to make sure you and anyone left on the mortgage can still afford the monthly repayments now and in the future.

In most cases, you’ll have to remortgage. If this is the case, look at deals that other lenders are offering as you might find a better one than your current lender is offering.

A mortgage broker can do this for you. Some, like Trussle, do not charge a fee.

You will need to pay for a solicitor to add or remove someone’s name from the property’s title deeds.

Insurance for your mortgage

Your home is very important to you and keeping up with your mortgage repayments is vital. 

When you take out a mortgage it’s worth considering mortgage protection to ensure you can continue to make payments if something happens that you were not expecting.

Protection policies pay out if you get very ill or die. People often consider them when taking out a mortgage.

There are 3 main types of mortgage protection insurance.

With income protection, the insurer covers some or all your regular income if you’re too ill to work.

Critical illness cover also pays if you become very ill. 

Life insurance pays out to someone you nominate, such as a family member or friend, when you die.

Read more about mortgage insurance.

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