Remortgage
The process of switching your existing mortgage to a new deal, either with your current lender or a different one, usually to get a better interest rate.
What is Remortgaging?
Remortgaging means replacing your current mortgage with a new one. This can be with a completely different lender, which involves a full application, property valuation, and legal work, or it can be with your existing lender through a simpler product transfer. Most people remortgage when their initial deal period ends to avoid falling onto their lender's expensive SVR.
Why people remortgage
The most common reason is to secure a lower interest rate. When your fixed or tracker deal ends, moving to a new deal can save you thousands of pounds per year compared to the SVR. Other reasons include releasing equity from your home for improvements or other purposes, consolidating debts, or changing the mortgage term.
When to start the process
Begin looking at remortgage options three to six months before your current deal expires. Most lenders allow you to lock in a new rate well in advance. This gives you time to compare the market, submit applications, and complete any legal work without rushing or accidentally landing on the SVR.
The remortgage process
If switching to a new lender, the process typically involves obtaining an AIP, submitting a full application with supporting documents, having the property valued, and instructing a solicitor to handle the legal transfer. Many remortgage deals include free legal work and free valuations as incentives. The whole process usually takes four to eight weeks.
Costs to consider
While the new rate may be lower, remortgaging can involve arrangement fees (often £500 to £1,500), valuation fees, and solicitor fees. Some of these may be covered by the new lender. Always calculate the total cost of the new deal over its full term, not just the monthly saving, to ensure it genuinely works out cheaper.
Important caveats
If your financial circumstances have changed since you last applied -- for example, reduced income or new debts -- you may not pass a new lender's affordability checks. In this situation, a product transfer with your existing lender may be the better option, as these typically do not require a full reassessment.
Related Terms
Product Transfer
Switching to a new mortgage deal with your existing lender without going through a full remortgage application.
Early Repayment Charge (ERC)
A fee charged by your lender if you repay your mortgage or overpay beyond allowed limits during a fixed or discounted rate period.
Standard Variable Rate (SVR)
Your lender's default mortgage interest rate, which you move onto after your initial fixed, tracker, or discounted deal period ends.