Remortgage

Remortgaging is the process of replacing your current mortgage with a new one. You are not moving house. Instead, you are renegotiating the terms of how you borrow against the property you already own. The new deal might come from your existing lender (sometimes called a product transfer) or from a completely different lender.

Most people remortgage because their initial deal has ended. When you first took out your mortgage, you probably chose a fixed or tracker rate that lasted two, three or five years. Once that introductory period finishes, your lender moves you onto their standard variable rate. SVRs are typically much higher, often 2 to 3 percentage points above competitive fixed rates. That difference on a £200,000 mortgage can mean paying an extra £250 to £400 per month.

Beyond chasing a lower rate, there are several other reasons to remortgage. You might want to release equity from your home to fund renovations, switch from an interest-only mortgage to a repayment one, or change the length of your mortgage term. Some homeowners remortgage to consolidate other debts into one monthly payment, though this means securing previously unsecured debt against your home and could cost more over the full term.

The best time to start looking for a new deal is around six months before your current rate ends. Most lenders let you lock in a remortgage offer that stays valid for up to six months, so you can secure a competitive rate well in advance without risking any gap. If you wait until your deal has already expired, you will spend time on the SVR paying more than you need to.

You might also consider remortgaging if your property has risen in value. A higher property value means a lower loan-to-value (LTV) ratio, and lenders reserve their best rates for borrowers with lower LTVs. For example, moving from 80% LTV to 60% LTV could knock 0.3 to 0.5 percentage points off your rate. Check your home's current value using free online tools or ask an estate agent for a desktop valuation.

If you are on a fixed rate and want to leave early, you will usually face an early repayment charge (ERC). These typically range from 1% to 5% of the outstanding balance, so you need to weigh the savings from a new deal against the cost of exiting early. A broker can run the numbers for you and confirm whether it makes financial sense to switch now or wait until the penalty period ends.

The amount you save depends on three things: the size of your mortgage, the difference between your current rate and the new one, and the fees involved. As a rough guide, switching from a 7.85% SVR to a 4.5% two-year fix on a £200,000 repayment mortgage over 25 years would cut your monthly payment by roughly £380, saving around £4,560 a year before fees.

Even if you are switching between competitive deals, there can still be meaningful savings. Moving from a 5.2% fix that is about to end to a 4.3% fix would save around £110 per month on the same £200,000 mortgage. Over a two-year fixed term, that adds up to roughly £2,640.

Use a remortgage calculator to estimate your personal savings. You will need to know your current outstanding balance, your remaining term, your current interest rate, and the rate you are considering switching to. Factor in any arrangement fees, valuation fees and legal costs. Many of the best remortgage products include free legal work and a free valuation, which can save you £1,000 to £1,500 in upfront costs.

When you remortgage, you choose from the same rate types as any other mortgage. The main options are fixed rates, tracker rates, discount rates and variable rates. Each works differently, and the right choice depends on your attitude to risk and how long you plan to stay in the property.

Fixed rate remortgages lock your monthly payment at the same level for an agreed period, usually two, three or five years. They give you certainty over your budget and protect you if interest rates rise. Most UK borrowers choose a fixed rate. Two-year fixes tend to have slightly lower headline rates than five-year deals, but you will pay arrangement fees more often over a ten-year period.

Tracker rate remortgages follow the Bank of England base rate plus a set margin. If the base rate falls, your payments drop. If it rises, your payments go up. Trackers can offer lower starting rates than fixes but carry more risk. Discount rate remortgages work similarly but track the lender's own SVR rather than the base rate, making them slightly less transparent.

A product transfer is another option. This means switching to a new deal with your existing lender without a full application. Product transfers are usually faster and involve less paperwork, but the rates may not be as competitive as deals from other lenders. A comparison of current remortgage rates can show you whether staying put or switching offers better value.

The remortgage process is simpler than buying a home because there is no chain and no property search. Start by reviewing your current mortgage terms, including any early repayment charges, your outstanding balance and your remaining term. Then compare deals across the whole market. A broker can handle this step and recommend the most suitable products.

Once you have chosen a deal, you submit a mortgage application to the new lender. They will carry out affordability checks, including verifying your income, outgoings and credit history. The lender will also arrange a property valuation. Many remortgage products include a free valuation, so you may not have to pay for this.

After the lender approves your application and the valuation is complete, a solicitor handles the legal work to transfer the mortgage from your old lender to the new one. Again, many remortgage deals include free conveyancing. The whole process typically takes four to eight weeks from application to completion, though straightforward cases can complete faster.

If you are self-employed, expect the process to take slightly longer. Lenders usually ask for two to three years of accounts or SA302 tax calculations, plus your most recent tax year overview from HMRC.

Remortgaging can involve several types of fee, though many lenders waive some or all of them to attract switchers. Here are the main costs to factor in.

Arrangement fee: charged by the new lender to set up the mortgage. Typical range is £0 to £1,499. You can usually add this to the mortgage balance, but you will then pay interest on it over the full term. Valuation fee: covers the cost of the lender's property survey. Many remortgage products include a free valuation. If not, expect to pay £150 to £600 depending on your property value.

Legal fees: a solicitor transfers the mortgage between lenders. Free conveyancing is included with many remortgage deals. Without it, budget £300 to £600 for a licensed conveyancer. Early repayment charge: if you leave your current deal before the introductory period ends, your existing lender may charge 1% to 5% of the outstanding balance. On a £200,000 mortgage, that could be £2,000 to £10,000.

Exit fee: some lenders charge a small admin fee (often £50 to £300) when you close your mortgage account with them. This is separate from any early repayment charge. When comparing remortgage deals, weigh the total cost of switching against the savings from a lower rate. A good broker will present you with a like-for-like comparison including all fees.