A Guide To Remortgaging

What is Remortgaging?

Remortgaging is the process of replacing your current mortgage with a new mortgage. This can mean:

• Moving to a new lender offering a better mortgage deal
• Staying with your current lender but switching to a different mortgage product

Most homeowners remortgage at the end of their fixed rate or discounted deal period to avoid reverting to their lender’s standard variable rate (SVR), which is often higher. However, remortgaging is possible at other times too and can serve various financial goals.

When Can You Remortgage?

Understanding when you can remortgage is crucial:

• At the end of your current mortgage deal: This is the most common time. Your deal period usually lasts 2-5 years, after which your rate will revert to the lender’s SVR. Remortgaging before this date can save you money.
• During your current mortgage term: Some lenders allow early remortgaging, but check for early repayment charges (ERCs) that could apply if you leave your deal early.
• After building equity: If your property’s value has increased or you’ve paid down some of your mortgage, you may remortgage to release equity or improve your terms.

Before remortgaging, always review your mortgage terms to see if and when you can switch without penalties.

Reasons to Consider Remortgaging

There are many reasons why homeowners choose to remortgage:

1. Move From a High-Interest Variable Rate

Switching from a lender’s standard variable rate or expensive tracker rate to a fixed or better tracker deal can lower monthly payments.

2. Reduce Monthly Payments or Make Overpayments

Better mortgage deals mean you could reduce repayments or pay off your mortgage faster through overpayments.

3. Release Equity for Home Improvements

Remortgaging can unlock your home’s increased value, allowing funds for renovations or extensions.

4. Consolidate Debt

You might use remortgaging to combine higher-interest debts like credit cards or personal loans into your mortgage, which usually has a lower interest rate.

5. Cover Children’s University Fees

Some parents raise funds via remortgage to help with tuition fees or living expenses, spreading repayments over many years.

6. Raise a Deposit for a Buy-to-Let Property

Remortgaging can free equity to help fund a deposit on an investment property.

What is a Product Transfer?

A product transfer is an alternative to remortgaging where you stay with your current lender but switch to a new mortgage deal or product they offer. It doesn’t involve changing the lender or applying for a new mortgage, so the process tends to be quicker and simpler.

When to Consider a Product Transfer Instead of Remortgaging

You might choose a product transfer when:

• You want to avoid the paperwork, valuation, and fees associated with a full remortgage.
• Your current lender offers a competitive new deal that suits your needs.
• You’re close to the end of your current deal and want a smooth switch to avoid SVR.
• You want to stay with a lender you’re happy with and trust.

However, sometimes remortgaging to a different lender can get you a better rate or more flexible terms, so it’s worth comparing both options.

When am I able to remortgage?

How to Know if Remortgaging or Product Transfer is Right for You

Here are a few things to consider:

• Fees and charges: Product transfers usually have fewer fees, but sometimes better remortgage deals outweigh these costs.
• Early repayment charges: Leaving your current deal early can lead to penalties—check if these apply.
• Mortgage rates and deals: Compare rates from your current lender and others.
• Your financial goals: Are you looking to borrow more, consolidate debt, or just get a better interest rate?