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How to get a remortgage

Written by Salman Haqqi, Senior Personal Finance Writer

17 June 2020

Considering a remortgage and need to know how to go about it? This guide will take you through everything you need to know about the process, including how much remortgaging your property might cost you, the risks associated with remortgaging, and some common problems you may encounter.

Couple doing accounts with help from friend

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

If you’re considering a remortgage and don’t to know how to go about it, we’re here to help.

This guide will take you through the whole process. We’ll explain the costs of remortgaging your property, the potential risks, and some common problems you might come across.

What is a remortgage?

Remortgaging is when you switch your existing mortgage to a new deal, but stay in the same property. You could switch to a new lender, or stick with your existing one.

Like a regular mortgage, a remortgage is a loan taken out against the value of your property. 

Why do people remortgage?

There are lots of reasons. For example:

  • To get a better mortgage deal. Good mortgage deals tend to be fixed for around two to five years. When the deal ends, interest rates rise. At this point, many people remortgage to find a cheaper rate. 

  • To release equity: Some people remortgage to release cash that’s tied up in their home. They often want to do some home improvements with the money. It can be a sensible move if the improvements add value to the property.

  • To consolidate debt: Debt consolidation is another reason people remortgage. It’s something to think carefully about. It’s tempting to use your property as security for a debt consolidation loan, but your home could be repossessed if you can’t make the repayments. It’s risky.

  • Flexibility: Sometimes people want the flexibility to overpay their mortgage, so they can pay it off quicker.

  • You qualify for a better mortgage: If your property’s now worth more than when you bought it, you’ll now have a better loan-to-value ratio. That means you might quality for a better mortgage deal.

  • A combination of the above: Some people might like to find a better deal, as well as release some cash for home improvements, for example.

Remortgaging your home is a big decision. Shop around and think about getting professional advice before you go ahead.

What are the pros and cons of remortgaging?

As with any financial decision, there are pros and cons to remortgaging your property. The important thing is to do your research so you have all the facts and understand what you’re doing.

ProsCons
You could save money by getting a cheaper rateThe process of switching can be expensive due to fees
You may be able to get a more flexible mortgageYou might have to pay an early redemption fee
You may be able to borrow more moneyIf your financial situation has changed it might be hard to get a new mortgage deal
You can access cash that's tied up in your house
You can choose a new mortgage deal that's better for your current situation

You’ll need to be careful if you’re planning to move house, because not all mortgages are portable and it can be expensive to exit a mortgage straight away.

What to consider before you remortgage

Whether remortgaging is a good idea depends on your reasons for doing it. So ask yourself: why am I remortgaging?

If you’re just looking for a better deal, you might save money. But, if you’re remortgaging to raise finance, you’re taking money out of your property. That means your monthly mortgage repayments could rise, unless you find a better deal at the same time. Look at the long and short-term savings to see what works out cheapest overall.

The main factors that will affect your switch are the size of your mortgage and how long you have left on your mortgage term.

Don’t forget to factor in the price of remortgaging. Remortgaging a property comes with lots of fees. If your mortgage debt is small, it might not be worth switching lender as the costs might outweigh the benefits. 

Similarly, if you have a large early repayment fee on your current mortgage, the costs might outweigh the benefits. 

If your property has increased a lot in value, you might find that your loan-to-value has changed so much that you’re eligible for better rates. So make sure you get an up-to-date property valuation when you remortgage. The lender can do this, or you can arrange an independent valuation.

How much does it cost to remortgage?

Remortgaging is expensive and you’re likely to face set-up and admin fees when you switch mortgage deals. Some lenders advertise fee-free deals, but they might just be hiding the fees within their interest rates.

Also check whether your existing lender charges an early repayment fee. These can be high in some cases so you’ll need to factor it into your overall cost workings.

A mortgage advisor can help you to work out the best deal. But they may also charge for their advice, so that’s another cost to factor into your calculations, along with legal fees and valuation fees.

The interest rates on your mortgage will be based on your loan-to-value and your credit history.

Where to start with remortgaging

If you’re remortgaging, it’s likely you know a little about mortgages already. But the industry is always changing, and so are your finances. So it’s still wise to do your homework.

Mortgage calculators can be a good place to start. Ours can help you work out:

The next step is to compare remortgage deals here. Our remortgage comparison table is a great place to check out what’s available

Even if you want to contact lenders directly to see what they can offer, our remortgage comparison tool is a good place to begin. You can make sure you’re as informed as possible before you speak to any lenders.

You might also choose to speak to a qualified mortgage advisor. This way you’ll get professional, tailored advice about remortgages and mortgage lenders. 

Think carefully before remortgaging 

Remortgaging is a major financial decision. 

It can save you money and help you clear your mortgage quicker. But it could also leave you worse off if you choose the wrong path.

Do your research, learn the jargon and get professional advice if you need to.

Switch to a better deal when you need to remortgage by comparing the rates and fees

Compare remortgages

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