What’s in this remortgage guide:

  • What is a remortgage

    • Includes what remortgaging means and why you might want to remortgage

  • How to remortgage

    • Includes how long it takes and if you need a solicitor

  • How much you can save by remortgaging

    • Includes how much remortgaging costs and remortgaging fees

  • Remortgage deals

    • Includes how to find the best deals

  • Types of remortgage

    • Buy to let remortgage

    • Remortgage with bad credit

    • Remortgage to release equity

    • Remortgage to buy another house

    • Remortgage for debt consolidation

    • Remortgage for shared ownership

    • Remortgage for home improvements

    • Remortgage when you own your house outright

    • Remortgage interest only

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.

There are lots of reasons why you might want to remortgage.

They include to:

  • get a better rate

  • buy another property 

  • pay off other debts

  • make home improvements

How to remortgage

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

So it’s a good idea to start looking for a new deal about three months before you need one.

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

Read our lender guides to find out how long it takes Trussle customers to remortgage with different lenders.

4 steps to remortgaging

Step 1 - Check for charges

If you're remortgaging before the end of your current deal's initial period, you may have to pay an early repayment charge (ERC).

It can be up to 5% of your mortgage balance. The percentage is set out in the terms and conditions of your mortgage.

Speak to your lender if you don’t know how much you’d have to pay.

It may make financial sense to wait until your deal is about to end before you remortgage.

Step 2 - Look at your credit report

If you remortgage with your current lender, they won’t check your credit history, as long as you’re not borrowing more money or making any major changes to your loan.

This could be changing the length of your mortgage or the type of mortgage, for example.

Otherwise, a lender will look at your credit report. Your credit report, also known as your credit 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 may 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.

This is because if you apply for a remortgage, and the lender turns you down, it will affect your credit history.

It could make it harder to get a loan in the future.

Read our credit score guide to know more about credit reports and scores

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

CRAs include:

  • Experian

  • Equifax

  • TransUnion

If your credit report doesn’t look good, consider improving it before you remortgage.

Read our bad credit mortgage guide to find out how.

Step 3 - Find out how much your home is worth at the moment

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.

Ask an estate agent to value your home, or check a house price website like Zoopla, as your home might have gone up – or down – since you bought it.

You’ll then have a more accurate figure to use when you look for deals.

Step 4 - Get a new mortgage

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 much better deal elsewhere.

Using comparison sites

These can give you a good idea of what deals are on the market.

But you might not be able to get the one you want.

This is because lenders attach certain rules to their mortgages, and your situation might not match them.

The benefits of brokers

Brokers help you decide what type of mortgage you need, then find the deal that suits you best.

Some brokers work with lots of lenders – Trussle deals with more than 90, for example – so they’re able to choose from lots of different deals.

This means they can be very helpful if your situation is a bit different, such as having bad credit or being self employed.

A small number of lenders (like First Direct) don’t offer mortgages through brokers.

Some brokers charge a fee. Trussle is fee free.

Do you need a solicitor

You won’t need a solicitor, also known as a conveyancer, if you remortgage with your current lender.

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

Your savings will depend on personal circumstances

How much you can save by remortgaging

Our research found that some people save almost £5,000 when they remortgage.

The most common reason people remortgage is to save money.

This is because lenders often offer a low interest rate for a fixed period (usually 2 to 10 years) on new mortgages.

When it ends, they move your mortgage onto their Standard Variable Rate (SVR).

SVRs are usually quite high, which can make your mortgage much more expensive.

Research for the Trussle Mortgage Saver Review 2018 found that the difference between a market leading deal and the average SVR is around £4,700 in interest a year.

How much remortgaging costs

Remortgaging can cost anything between nothing and several thousand pounds.

The amount varies depending on things such as whether you change lenders and what fees they charge.

Before choosing your mortgage, it’s very important to know exactly how much it will cost you in the long run.

The true cost of your mortgage is the monthly repayments, plus fees, minus any cashback. 

Remortgage fees

You may not have to pay a fee if you stay with your current lender.

Speak to your lender or a mortgage broker to find out which fees you'll have to pay.

Early Repayment Charge

If you're remortgaging before the end of your current deal's initial period, you may have to pay an early repayment charge.

It can be anything up to 5% of your mortgage balance.

Check the terms and conditions of your mortgage to see how much it is or ask your lender.

Arrangement fee or product fee

This is what a lender charges for setting up your new mortgage. It can be anything from £300 to £2,000. It’s often £1,000 though.

A mortgage deal with a higher arrangement fee will usually have a lower interest rate.

A deal with a lower arrangement fee will often have a higher interest rate.

If you’ve got a big mortgage, it could work out cheaper to have a lower interest rate and a higher arrangement fee.

If you’ve got a small mortgage, a lower arrangement fee and higher interest rate may be cheaper in the long run.

You can also choose whether to pay the repayment fee when you take out the mortgage or add it to your mortgage.

If you add it to your mortgage it will be more expensive as you’ll be charged interest on it.

Booking fee/reservation fee/application fee

This is usually around £100 to £200 and you pay it when you apply for a mortgage. You won’t be able to claim it back if your mortgage doesn’t go ahead.

Valuation fee

This is what a lender charges to value your home.

A valuation enables them to check that your home meets certain conditions in the mortgage.

A lender also needs to be certain of how much it’s worth because they may sell it to get their money back if you miss repayments.

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

Chaps fee (or funds transfer fee)

This is the cost of electronically transferring the mortgage funds to you or your solicitor.

It can be around £30.

Deeds release fee/mortgage completion fee/redemption administration fee/discharge fee

This fee is charged when you end your mortgage contract. It can be anything from £50 to £300.

Conveyancing costs

These are the legal fees.

You won’t need a solicitor if you remortgage with your current lender.

You will need one if you remortgage with a new lender.

Your new lender may offer to pay for your legal fees, but you won’t be able to choose your solicitor.

It can sometimes be quicker to use your own solicitor.

Broker fees

Some brokers charge a fee for their service.

It can be fixed or a percentage of your loan. The amount varies, but is often around £500 for a normal residential mortgage.

In most cases, you only have to pay it if you apply for a mortgage with one of the lenders they suggest. 

Trussle is fee free.

Our best remortgage deals this week

These deals are based on a:

  • £181,600 mortgage

  • 25 year term

  • £227,000 property

We’ve looked for the best deals based on their true cost.

This includes:

  • capital

  • interest

  • fees

  • cashback

2 year fixed deal

£18,015.56

True cost over initial period

£822.94

Monthly payment

Details

Based on getting a mortgage of £181,600 over a 25 year term. Includes £0 upfront fee and 1% cashback = £1,816. 2.59% initial rate reverts to 4.99% SVR after initial 25 month period, costing £1,031.36 per month for 275 months. Total amount payable is £299,434.90 including interest and fees. That's a 4.40% APRC. True cost based on a 25 month period. This deal was last updated on 24th February 2020.

5 year fixed deal

£45,832.40

True cost over initial period

£746.94

Monthly payment

Details

Based on getting a mortgage of £181,600 over 25 years. Includes £999 upfront fee and £0 cashback. 1.74% initial rate reverts to 4.19% SVR after initial 61 month period, costing £931.34 per month for 236 months. Total amount payable is £269,169.60 including interest and fees. That's a 3.30% APRC. True cost based on a 60 month period. This deal was last updated on 24th February 2020.

How to find the best remortgage deals

Comparison sites can give you a good idea of what deals are on the market.

But you might not be able to get the one you pick as your situation might not match the lender’s conditions.

Mortgage brokers help you decide what type of mortgage you need, then find the deal that suits you best.

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

See how much we could help you save with a remortgage

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

Types of remortgages

Buy to let remortgage

Some reasons to remortgage your buy to let property include to:

  • get a better rate

  • buy another property

  • improve your home

  • pay off other debts

  • set up a business

  • 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 normal 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.

Remortgage with bad credit

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.

Read our credit score guide to find out more about how to improve your credit score.

Remortgage to release equity

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 different mortgage in order to get some money out of your property.

You might want some money to:

  • build an extension

  • pay for a wedding

  • put down a deposit to buy another property

  • start a new business

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.

Remortgage to buy another house

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

By switching to another mortgage you could take out some of the money in your home and use it to pay for the deposit for another one.

Your mortgage repayments will go up as you’ll be borrowing more.

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

There are key differences to a buy to let mortgage:

  • fees and interest rates tend to be higher

  • the minimum deposit is usually 25% of the property’s value

Remortgage for debt consolidation

Remortgaging for debt consolidation is when you take out some equity from your home and use it to pay off your debts.

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 this way could be cheaper than using a balance transfer credit card or debt consolidation loan.

It will depend on a number of things such as 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.

Remortgage for shared ownership

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

The two most common reasons are to:

  • get a better interest rate

  • own more shares

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

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’.

Remortgages for shared ownership can be more expensive than a normal residential remortgage.

This is because fewer lenders offer mortgages for shared ownership, so there's less competition for customers.

Remortgage for home improvements

If you want to improve your home you may be able 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 go up.

When home improvements increase the value of your home

Remortgaging for home improvements can be a good idea.

Having an extension built can be cheaper than buying a bigger house, for example, especially when you take into account stamp duty.

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

How you improve your home could also make it worth more. A loft conversion may cost £30,000, but it could increase the value of your home by more than that.

Not all home improvements will increase the value of your home.

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

Some home improvements can even make your home more difficult to sell. Not everyone wants to look after a swimming pool, for example.

And if you add another bedroom to a three bedroom house, but don’t increase the space downstairs, some buyers might decide your home isn’t big enough for a family of six.

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

The best time to remortgage for home improvements

The best time to put the cost of home improvements on 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 the extra borrowing for.

They’ll see whether you can afford it, which could be either a hard or soft credit check, depending on their rules.

See our credit score guide for the difference between a hard and soft credit check.

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

Remortgage when you own your house outright

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, for example, or to help one of your children to get on the housing ladder.

Is it a mortgage or remortgage?

If you’ve paid off your mortgage, and haven't got any other loans secured against it, your home is what lenders describe as ‘unencumbered’.

Some lenders offer remortgages if your home is unencumbered, while others offer new purchase products.

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

The fact that your home is unencumbered may affect:

  • the rate you’re offered

  • incentives such as free valuations

Plenty of lenders

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

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

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

Remortgage interest only

An interest only mortgage is one when you pay only the interest in your monthly repayments, which means they can be quite low.

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

  • the sale of another property

  • savings

  • an endowment

  • investments

Normally 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 normally make their 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.

Get a mortgage with Trussle today

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  • Straightforward online application process

  • No waiting for appointments

  • No paperwork

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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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