What does remortgage mean?
When you remortgage a house you change your existing mortgage to a new deal. You can switch mortgage with your current provider or a new one. You don’t need to move house because the mortgage is secured against the same property as before.
Why remortgage?
People remortgage for various different reasons. Some of the most common are to:
- release equity on their home and raise a cash lump sum
- make home improvements, like a loft conversion or a new bathroom
- build an extension, such as adding another bedroom
- pay off debt if they’re struggling to keep up with repayments
- find a better deal, with lower interest rates
- consolidate their debts and have one fixed monthly repayment instead of several
- fix their monthly repayments if they’re on a variable mortgage rate and are worried about interest rates rising
How early can you remortgage?
You can remortgage at any time, however this isn’t always a wise move.
You’ll need to consider when your current deal is due to end. Early repayment charges may apply if you repay your mortgage early. So, it’s best to check your terms and conditions first.
When is the best time to remortgage?
If you want to remortgage early, ask yourself these four questions to get an idea if it’s a good time to do so:
- Can you access cheaper interest rates than what you’re on now?
- Have you built up more equity in your property? (i.e. this is the difference between the value of your home and the mortgage you owe)
- Will your new mortgage cost less even after early repayment fees?
- Has your fixed mortgage deal has finished? If so, this will allow you to get a new deal without being charged ERCs.
It’s important to note that the lower your loan to value (LTV) and the more equity you have, the more competitive rates you’ll be able to access when you remortgage.
Can you remortgage when on a fixed rate?
If you want to change mortgage provider and you’re on a fixed rate mortgage you can do so. However, you may want to wait until you’ve finished your term to avoid ERCs.
Fixed rate mortgages normally run for two to 10 years before moving to the standard variable interest rate (SVR) of your current lender. This rate will likely be higher than what you were paying before. So, when you get to the end of your term it may be worth remortgaging to a better deal.
Remortgaging before your fixed term mortgage is up can be tricky. It is possible, but you’ll probably be charged early repayment fees that may mean it’s not in your financial interests to switch. However, if interest rates have dropped significantly since you took out your fixed rate mortgage the benefits could outweigh the costs.
How long does a remortgage take?
The remortgage process can take up to two months if you’re switching to a new provider (as an estimate). If you’re taking out a different deal from the same provider, it can take less time – usually up to one month.
This means that you should start looking into your remortgage options about six months before your current deal finishes. That way you have plenty of time to do thorough research, weigh up your options and make a decision before you’re moved onto the SVR.
Do you need a solicitor to remortgage?
If you remortgage with the same lender you won’t need a solicitor to complete any legal paperwork for you. This is because you’re simply moving products with the same provider.
However, if you’re looking to switch providers, you’ll need to go through the same legal process you did when you first applied for a mortgage. This will require a solicitor, which means you’ll have to pay extra costs.
Remortgage costs
The remortgage process can be expensive if you switch providers, but it can be worth it if you find a better deal elsewhere that outweighs these costs.
- early repayment charges – these are fees your current mortgage provider may charge you for repaying your mortgage early and can be expensive
- arrangement costs – these are what you pay your new provider to set up your mortgage and are usually charged as a percentage of the total loan
- valuation fees – when you remortgage the new provider will value your property to see if it’s worth the amount you’re looking to borrow
- legal costs – you’ll need to pay a solicitor to complete the legal paperwork
If you’re unsure about whether remortgaging is right for your circumstances, you can seek remortgage advice from a mortgage adviser or ask Citizen’s Advice for help with your finances.
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Mortgages are secured against your property. This means your home may be at risk if you fall behind with your mortgage repayments.
Note, the more you borrow and the longer your mortgage term, the more interest you'll pay in total.
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Adele Kitchen
Personal Finance Writer
Adele is a personal finance writer with more than 10 years in the finance industry behind her. She writes clear and engaging guides on all things loans for Ocean, as well as contributing blogs to help people understand their options when it comes to money.
