Remortgaging involves switching your mortgage to a new deal with a new lender or your existing one. Remortgaging can be used to reduce your mortgage payments or to release equity from your home. But it’s not right for everyone. Read our step-by-step guide on how to remortgage and everything you’ll need to consider.
Remortgaging is when you switch to another mortgage, either with your current mortgage lender or a different one. Your new mortgage will then replace your old one.
Your mortgage is probably your biggest financial commitment. Your remortgage is as important a decision as when you first got your mortgage and there are lots of different options to choose from. So here we cover what remortgaging entails and what you need to think about.
Here are the steps you’ll need to take to remortgage:
Dig out your paperwork. Remind yourself of your current mortgage deal. What type of mortgage are you on? What is the current interest rate? How long have you got left to pay? What are your monthly payments?
Speak to a fee-free mortgage broker or start the process online. A mortgage adviser will find the best remortgage deals available for you. Plus, they’ll crunch the numbers taking into account any fees you’ll need to pay so you’ll know exactly how much it will cost.
Make your mortgage application. This stage is much faster if you use a mortgage broker as they’ll do the mortgage application for you.
There are lots of reasons why you should remortgage:
1. Your current mortgage deal is coming to an end
When your current mortgage deal ends, if you don’t remortgage you’ll be put onto your lender’s standard variable rate (SVR). These can have extremely high interest rates so your mortgage payments could shoot up. This is why you should look at your remortgage options up to 6 months before your current deal ends.
2. You want to increase your borrowing to free up cash for a major expense
If you’re currently tied into a mortgage deal, you may be able to reduce your mortgage payments by remortgaging onto a deal with a better rate. But this will depend on the rate you’re currently paying vs the rate you can get. Plus, you’ll need to take into account any fees involved in exiting your current deal like an early repayment charge. The best place to start is by speaking to a fee-free mortgage broker. They’ll explain your mortgage options and crunch the numbers for you can see how much money you may be able to save.
4. You want to overpay
If your circumstances have changed, such as if you’ve inherited some money, and you want to make mortgage overpayments but your current deal won’t let you, or will only let you overpay by a small amount, you may want to remortgage to a more flexible deal.
However, while making overpayments can cut the amount of interest you’ll pay on your mortgage and can mean you’re mortgage-free faster, you will need to consider whether you need to pay fees to leave your current deal like an early repayment charge. So speak to a fee-free mortgage broker. They’ll explain your options and do the calculations to show you how much money you may be able to save by remortgaging.
5. Your property has increased in value
If your property has increased in value, the amount of equity you’ll have in your home will increase too. This means you’ll need a lower loan to value (LTV) mortgage. Generally, the lower your LTV, the better mortgage rates you’ll get access to. So you may be able to remortgage onto a better deal if your home has increased in value.
However, if you’re in the middle of a deal, make sure you find out about any fees you may need to pay to exit it. Starting by speaking to a fee-free mortgage broker who will explain your mortgage options.
6. To fix your payments
Moving to a fixed rate deal will give you certainty of your monthly mortgage outgoings. However, while the amount you’ll pay won’t increase in your initial period, it won’t go down either.
However, remortgaging may not be the best option for you, depending on your circumstances. Here are some of the reasons why remortgaging might not be right for you.
1. Your mortgage amount is small
If your mortgage debt falls below a certain amount, such as around £50,000, it may not be worth remortgaging because the mortgage fees you may need to pay may outweigh any savings you may make by remortgaging.
However, it’s still worth investigating your options because you may still be able to save. For example, you may be able to get a better rate than you’re currently on that doesn’t have any fees. So chat it through with a fee-free mortgage broker.
2. Your early repayment charge is high
Remortgaging if you have to pay a high early repayment charge could be extremely expensive. Early repayment charges are usually charged as a percentage of your outstanding mortgage balance and while some lenders reduce the ERC rate you pay the longer you’ve had the mortgage deal, other lenders keep the same rate throughout. And early repayment charges could amount to thousands of pounds. For example, if you have a mortgage balance of £200,000 and there’s a 3% ERC, you’d need to pay an early repayment charge of £6,000 if you remortgage before your deal ends.
3. Your personal circumstances have changed
When you remortgage with a different lender, you’ll need to go through the full mortgage application process which means the lender will consider your income and outgoings when deciding whether to lend. If your circumstances have changed since you took out your last mortgage, such as if your earnings have reduced or if you’ve recently gone self-employed, you may find it harder to get a mortgage. In this scenario, you may be better off remortgaging onto a new deal with your existing lender – this is known as a product transfer.
You’ll be limited to the rates your current lender offers and these may not be the best mortgage rates on the market. But there’s usually less paperwork involved as long as you’re borrowing the same amount over the same term. And you may still be able to save money. So it’s advisable to speak to a fee-free mortgage broker about your options.
4. Your home’s value has dropped
If the value of your home drops, so does the amount of equity you have in it. And this means you’ll own a smaller proportion of your house compared to the size of your mortgage. This can be an issue if you had a small deposit in the first place and want to remortgage, especially if you now have less than 5% equity in your house. If your home’s value has dropped, it’s a good idea to a fee-free mortgage broker about your options.
However, if your home’s value drops and you’re in negative equity, which means the market value of your home is lower than the outstanding mortgage balance, this is a major concern if you want to remortgage. Read our guide Negative equity: What is it and how to get out of it.
5. You’ve had bad credit issues
If you’ve had issues with your credit history since applying for your last mortgage, you may find it harder to remortgage. So it’s crucial to get advice tailored to your personal circumstances: it may be that remortgaging is perfectly possible or it may be better to take some time to improve your credit score before remortgaging. Read our guide on Bad credit mortgages.
6. You’re currently on a cheap rate
If you’re still on a cheap mortgage rate that you fixed several years ago, then think very carefully before remortgaging as you could end up needing to pay a much higher rate on your entire mortgage.
If you want to remortgage to release equity from your home as a way of borrowing money such as for home improvements, there are alternatives you may want to consider. For example, you may be able to borrow more from your existing lender, this is known as a further advance and will typically be at a different rate to your main mortgage. Or you may choose to take out a second charge mortgage, also known as a homeowner loan. These allow you to borrow money from a different lender to your original lender using your house as security. Find out more in our guide Is remortgaging to release equity from your home right for you?
When should I remortgage?
Here’s when you should remortgage to avoid paying over the odds.
Set a reminder for four months before your current mortgage deal is due to end. Then speak to a mortgage broker to start the remortgage process, they’ll shop around for the best deal for you. By taking action at this point you can lock in the best mortgage deal then keep it under review to see if a better deal comes up before you switch to your new deal. Plus, it means you’ll avoid rolling onto your lender’s expensive standard variable rate. Mortgage brokers L&C offer this Rate-Check service for free. For more advice, see our guide should I remortgage now?
On the standard variable rate? Act now. However, if you’re on your lender’s standard variable rate, check your deal now to see if you can save by remortgaging as average mortgage interest rates on SVRs have soared over the last few years.
Beware of penalties. If you’re in the middle of your current mortgage deal and want to remortgage, make sure you find out about any early repayment charges you may need to pay as these can be hefty.
You should allow up to 3 months for the remortgage process but it may be much quicker. And if you’re remortgaging with your existing lender, known as a product transfer, this generally takes about a week.
However, factors that can cause delays in the remortgage process include:
The complexity of your mortgage application. For example, if underwriter asks for more information, this will take extra time.
Problems with your credit report. When you apply to remortgage the lender will check your credit score. So make sure every detail in your credit reports is correct because even a minor spelling mistake on your address could cause a problem.
Missing paperwork. You’ll need to provide various documents like payslips if you’re employed and documents like your SA302 tax calculations if you’re self-employed. So find out what you’ll need to submit in advance and dig them out to avoid delays.
Discrepancies with the property valuation. If there are any discrepancies in the mortgage valuation of the property this could cause delays.
If you’ve changed jobs recently. If you’ve changed jobs in the previous few months, it can make it harder to remortgage, especially if you have become self-employed.
Remortgaging fees: how much will remortgaging cost?
These are the remortgaging costs you may need to pay:
Remortgaging Costs
How much?
Early repayment charge
Typically 1%-5%, may reduce over the course of your deal.
Exit fee (also know as account fee)
Typically £50 – £300
Arrangement fee
If charged, this is typically £500-£1,500
Legal fees
Lender may include this for free. If not, typical costs are £300+
Mortgage valuation fees
Lender may include this for free. If not, typical costs are £100 – £1500
As you can see from the above table of remortgage costs, there are a number of fees that can apply. See our guide to remortgaging costs for more detail on costs and when they apply.
Early repayment charge: If you’re tied into a deal, it’s likely that you’ll have to pay an early repayment charge if you remortgage. These are usually calculated as a percentage of the outstanding mortgage balance – usually 1%-5%. However, with some deals the rate you’ll pay reduces the longer you’ve had the deal for. For example, you may have to pay 5% in the first year of a 5 year fix, reducing to 1% in the fifth year.
Exit fees: Many lenders charge an exit fee for closing your mortgage account. It may be called something different. For example Halifax calls it a mortgage account fee. These are usually between £50 – £300.
Arrangement fees: Lenders often charge arrangement fees when you take out a mortgage with them. These vary but generally cost £500-£1,500.
Legal fees: If you’re remortgaging with a different lender, you’ll need a conveyancer to manage the legal side. Legal fees are often included in remortgage deals but not always. If they’re not included, many people use the conveyancer offered by their lender. But if you’re paying for the solicitor you can shop around for the best deal. Although, if you’re doing this, make sure your lender will work with the conveyancer before instructing them. Remortgage legal fees can cost from £300. Read out guide to Do I need a conveyancing solicitor when I remortgage?
Valuation fees:Mortgage valuation fees depend on the value of the property and lenders will have their own fee scale. Fees can vary significantly from £100 up to £1500. In many cases a lender will offer a free valuation. See How do I value my property before remortgaging?
Video: When & How to remortgage
Should you remortgage?
Should I add remortgage fees to my loan?
You can either pay arrangement fees up front when you remortgage or add them to your loan. The latter is a common choice, but interest will be added to the fees and they will end up costing more overall.
For example, if you take out a mortgage for £100,000 at 4.5% over 25 years and pay a £1,000 arrangement fee up front, you’ll pay £556 a month on your mortgage and total interest of £66,684.
But if you add the arrangement fee to your mortgage and therefore take out a £101,000 mortgage at 4.5% over 25 years, you’ll pay £561 a month on your mortgage and total interest of £67,352. This means you’ll pay an extra £668 in interest by adding the arrangement fee onto your mortgage.
This example assumes you’ll pay the same rate for the duration of your mortgage term.
Compare remortgage rates
Whether you have a fixed or variable mortgage, it’s advisable to shop around up to 6 months before your current deal ends by speaking to a fee-free mortgage broker. As well as finding the best deal, by taking action early you’ll also avoid rolling onto your lender’s Standard Variable Rate (SVR).
If you’re locked into a mortgage deal, you may be able to extend your mortgage:
Extending your mortgage term: If you’re having difficulties paying your mortgage you should speak to your lender as soon as possible. Lenders must treat you fairly and consider any request you make to change the way you pay your mortgage. So if your payments are unmanageable you can ask about ways to make them more affordable such as by extending the term of your mortgage, taking a payment holiday or accepting lower payments for a while. You’ll find useful advice on the government-backed MoneyHelper website.
Extending your borrowing: If you want to access equity in your house but you don’t want to remortgage because you’ll lose your current mortgage rate or have to pay a high early repayment charge, you may be able to borrow more from your existing lender – this is called a further advance and this will usually be at a different rate to your main mortgage. Alternatively, may choose to take out a second charge mortgage, also known as a homeowner loan. These let you borrow money from a different lender using your house as security. Find out more in our guide Is remortgaging to release equity from your home right for you?
For example, say you own a £400,000 property and have an outstanding mortgage of £100,000, and you remortgage to release £100,000 equity in your home to buy a £200,000 Buy to Let property.
This means you’ll now have a £200,000 mortgage on your £400,000 home. Plus, you’ll need a £100,000 Buy to Let mortgage on your £200,000 Buy to Let investment.
But you should weigh up the pros and cons carefully first.
The benefits of remortgaging to invest in a Buy to Let
Saves time: If you want to invest in a Buy to Let, you’ll usually need at least a 20% deposit for a Buy to Let mortgage. Plus, there are extra costs like the higher rate of stamp duty you’ll need to pay. Remortgaging to release equity so that you can invest in a Buy to Let may be much quicker than saving up. Or you may even be able to buy the rental property outright.
Long-term investment: Many people invest in Buy to Let properties so that they’ll get a regular income but also to hopefully benefit from increases in property prices over time too.
The risks of remortgaging to invest in a Buy to Let
You’ll have two mortgages: If you need to take out a Buy to Let mortgage in order to invest in a rental property, this means you’ll need to cover two mortgages. Ideally one of these mortgages will be covered by rent but what if your Buy to Let property is empty for any length of time? Also, by taking out a bigger mortgage on your existing home, that mortgage will be bigger. Plus, there are ongoing costs you’ll need to pay too such as Landlord home insurance, maintenance and letting costs.
What if house prices fall? By remortgaging your own home to fund a Buy to Let, you’ll be hoping that both house prices increase over time. But what if that doesn’t happen?
Future tax changes: Tax changes in recent years have made owning a Buy to Let less lucrative than it used to be. Most recently, in the 2024 Budget the chancellor increased the additional rate of Stamp Duty paid by those buying second homes and Buy to Let properties from 3% to 5%. There was speculation that capital gains tax when selling a second property would also be hiked. While this didn’t happen, noone knows what tax rules changes could happen in the future.
If you already own a Buy to Let property, then keeping mortgage payments to a minimum should be the priority. Buy to Let mortgage rates have soared in recent years, so make sure you shop around for the best deal – find out more in our guide to the Best Buy to Let mortgage rates.
Remortgaging a Buy to Let property can also be a great way of raising funds for property renovations or to put towards expanding your property portfolio.
What are the barriers to remortgaging?
Here are some of the barriers to remortgaging and the possible solutions:
Poor credit rating: If you’ve had any issues with your credit rating, this can affect your remortgage chances. But there are ways you can boost your credit rating. Find out more in our guide 11 tips to improve your credit score for a mortgage.
Being self-employed: Mortgage lenders’ criteria is often stricter if you’re self-employed. So it’s even more important to get advice from a fee-free mortgage broker to make sure you apply to the best lender for you. See our guide on self employed mortgages for more information.
Your age: Lenders have upper limits on when they’ll need your mortgage to be repaid by. However, this upper limit ranges widely, typically from 70 to 85 years old. So if this is a concern for you, it’s important to get mortgage advice. Find more information in our guide mortgages for over 50s.
Affordability: Lenders will look at your income and outgoings when considering whether to lend to you or not. If your circumstances have changed since you last took out a mortgage, perhaps your earnings have reduced but your outgoings have increased, you may find it harder to remortgage. However, different lenders have different lending criteria, so speak to a fee-free mortgage broker and they’ll match you to the lender most likely to accept your application.
Debt to income ratio: Your debt to income ratio shows the amount of your monthly income used to pay off debts like credit cards, a mortgage and personal loans. And it’s a factor lenders consider when working out whether you can afford to take on more debt, like a bigger mortgage. If a high proportion of your income goes to paying off debts, you may find it harder to remortgage. So try to improve your DTI by paying off debts and boosting your income.
Loan to value and remortgage rates: When you take out a mortgage, the best rates are available for those with the biggest deposits. It works in the same way when you remortgage, except people generally use the equity in their home as their deposit. If your house is worth £200,000 and you have an outstanding mortgage balance of £150,000, you’ll have £50,000 equity in your home. This means you’ll own 25% of your home and need a 75% loan to value mortgage. However, if you have less than 5% equity in your home, it’s likely that you’ll struggle to remortgage. If this happens, try to make overpayments if you can afford to and if your lender allows you to do this penalty-free to increase the amount of equity you have in your home.
If you live in a flat, your mortgage lender may ask to see the building’s EWS1 form. The EWS1 form, also known as an EWS1 certificate, is intended to reassure lenders so that mortgages can be offered on flats within a building that has cladding. Most lenders will not need an EWS1. Between January and March 2022 EWS1 forms or equivalent were required by lenders in fewer than 1 in 10 cases. For more advice on when you may need one, see what is an EWS1 form.
Financial impact on interest rate changes: In August 2022, the Bank of England scrapped an affordability test that forced lenders to calculate whether potential borrowers would be able to cope if interest rates climbed by up to 3%. The measure was originally introduced in the aftermath of the financial crisis in 2007-08.
Can my existing mortgage lender offer the best deal?
The only way to find out if your existing mortgage lender offers the best deal is by seeing what other lenders offer. If you speak to a fee-free mortgage broker they’ll compare the best deals your current lender offers to the best mortgage rates on offer elsewhere.
However, there are other factors to consider when deciding whether to get a new deal with your existing lender or to switch to a new one.
Here are the pros and cons of switching lenders vs staying with your current one
Switching lenders
Staying with current lender
Can you access the best mortgage rates?
Yes. Although each lender will have its own criteria that you’ll need to meet.
Not necessarily. You’ll be limited to the rates your lender offers
Do you need a mortgage valuation?
Yes. You may need to pay for it
No
Is there legal work involved?
Yes. You may need to pay for it
No
Is there an affordability check?
Yes
Not usually if you’re borrowing the same amount for the same term
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