Remortgaging explained, from start to finish

Remortgaging means replacing the mortgage on the home you already own with a new one, either with a different lender or with the same one. It is the single most effective money-saving move most homeowners have, and the most neglected. This guide walks through when it makes sense, what actually happens, and what it costs.

Why people remortgage

The most common reason is that a fixed or tracker deal is coming to an end. When it does, the mortgage reverts to the lender’s standard variable rate, which is usually several percentage points higher. A new deal arranged in time avoids that entirely.

The second reason is that the numbers have moved in your favour. If your home has risen in value or you have paid down the balance, your loan to value may have dropped into a cheaper band, and a new lender will price you accordingly even if the old one will not.

People also remortgage to borrow more, most often for an extension or renovation, to change the term, or to move from interest-only to repayment. Some remortgage to consolidate other debts, which deserves its own section below.

When to start

Six months before your current deal ends. That is not an exaggeration. Most lenders will let you reserve a new rate up to six months in advance and switch on the day the old deal finishes, so starting early costs nothing and protects you if rates rise in the meantime. If rates fall before you complete, a good broker can usually swap you onto the better deal.

If your deal has already ended and you are on the standard variable rate, start today. Every month on the SVR is money you will not get back.

Product transfer or full remortgage?

A product transfer is a new deal with your existing lender. It is quick, involves little paperwork, usually needs no valuation or legal work, and can often be done in a fortnight. The trade-off is that you only see one lender’s rates.

A full remortgage moves you to a new lender. It takes longer, typically four to eight weeks, and involves an application, a valuation and a solicitor. In return you get the whole market to choose from, and the difference between one lender’s best offer and the market’s best offer can be worth a great deal over a five-year fix. We compare both routes and tell you which comes out ahead for your figures.

The process, step by step

1. The conversation. An adviser looks at your current mortgage, the end date, the balance, the property’s likely value and what you want to achieve.
2. The comparison. We search the lenders we work with, including your current lender’s transfer rates, and recommend a deal.
3. The paperwork. Recent payslips or accounts, bank statements, identification and your existing mortgage statement. Self-employed borrowers usually need two years of accounts or tax calculations.
4. The application and valuation. The new lender assesses affordability, credit history and the property. Many remortgage deals include a free valuation.
5. The offer. A formal mortgage offer, usually valid for six months.
6. The legal work. A solicitor redeems the old mortgage and registers the new one. Many remortgage deals include free standard legal work; otherwise budget a few hundred pounds.
7. Completion. The new lender pays off the old one, and your next payment goes to the new lender at the new rate.

The calculator will show you what the new payment looks like at any rate and term you want to test, and the difference against what you pay now.

What it costs

Three costs can apply. An early repayment charge if you leave your current deal before it ends, which is why timing matters. A product fee on the new deal, which can often be added to the loan although it then attracts interest. And any valuation or legal fees not covered by the new lender’s incentives. Our own fee for arranging the mortgage is agreed with you before we start.

Set the total against the saving over the life of the new deal. A remortgage that costs £1,500 to arrange and saves £180 a month has paid for itself inside nine months.

Consolidating debts: think carefully

Rolling credit cards and loans into a mortgage lowers the monthly outgoing, which is why it is tempting. It also turns unsecured debt into debt secured on your home, stretches it over a mortgage term so the total interest can be much higher, and puts the roof over your head behind the repayments. Sometimes it is still the right call. It should never be the default one, and an adviser will always show you the total cost both ways.

Next steps

If your deal ends within the next six months, or you have never remortgaged and suspect you are paying too much, ask us for a remortgage quote. Bring your latest mortgage statement and we will do the rest.

This guide is general information, not advice. It describes how things usually work and cannot take your circumstances into account. For a recommendation, speak to an adviser.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Think carefully before securing other debts against your home.

Our mortgage broker fee starts from £495. The exact fee depends on your circumstances and is agreed with you before you commit to anything.