Remortgage
There are many reasons why you might want to consider remortgaging your home or a Buy to Let property.
Getting the best remortgage deals can save you thousands over the term of your mortgage, so it’s important to make the right decision. There are literally thousands of remortgage rates to choose from and hundreds of mortgage lenders.
If you need EXPERT mortgage advice then you can contact our team on 0330 118 8188 or CLICK HERE.
Here are some of the answers to the most common questions that people ask us about getting a remortgage.
What is a remortgage?
A remortgage is simply where you would switch an existing mortgage on a property that you own to another lender, or another deal with the same lender.
The most common reasons for remortgaging:
- Home improvements
- Debt consolidation
- Save money (reduce mortgage rate)
- Change rate (e.g. Fixed, Discount or Tracker rates)
- Raise money
These are the most common reasons for considering a remortgage on your property, but there are other reasons that you might be looking at.
Best remortgage deals
Getting the best remortgage deal can be extremely confusing, especially for people with complex incomes or adverse credit (poor credit history).
There are also several ways to help yourself to get the best remortgage deals that can help you to save money. Some of the quickest and easiest things to do are:
- Improve your credit score or rating: Someone with a good credit score will be more likely to be able to get a lower mortgage rate or better deal
- Increase your deposit: The amount that you borrow against the value of your property (loan-to-value) will directly impact your remortgage rate
- Look for the best deals: You can easily compare deals from a wide range of lenders to find out which ones are best for you
- Low fees deals: You can also reduce the cost of remortgaging your home by looking for deals with no fees or lower fees
How does remortgaging work?
You are entitled to remortgage your property at any point and for most reasons. However, there are things to consider that might make it either less worthwhile or more expensive to do so.
There are a few questions that you should ask yourself before you consider a remortgage:
- Do I have an early repayment charge (ERC) on my existing mortgage? You might have taken out a mortgage on a ‘special rate’ (e.g. fixed or discount deal) that has a charge for early repayment (usually while the special rate still exists). If you have a penalty for early repayment then it could make remortgaging less worthwhile and more costly.
- Have I got enough equity to remortgage my home? Sometimes you might be in a situation where you might not have enough equity in your property to apply for a remortgage. This can be particularly true for people with a high loan-to-value (LTV) mortgage or if property prices have fallen in your area.
- Does my debt consolidation extend my interest and cost more long-term? You might want to consolidate some of your short-term debts (e.g. Loans or credit cards), which can seem like a good idea to help with immediate outgoings. However, you should consider whether this is something that is going to significantly increase your long-term debt and interest charges.
- Am I planning on moving home in the future? If you’re thinking about a remortgage then you should also consider whether you’re planning on moving home in the near future. Most remortgage deals will be portable which means that you can transfer them to a new property, however, this also needs to fit on the property that you will buy. There are a number of things to consider here and you should ask your advisor or your bank for advice in this situation.
- Will I be able to afford my new mortgage payments long-term? There are also many reasons why you might not be able to afford the same outgoings in the future. Your circumstances can change (e.g. new job, having a child, marriage etc.) that can all affect your affordability. Consider whether any of these might apply to you in the short, medium, or even long-term future.
Once you’ve established that the remortgage option is right for you then you should speak to an expert to find the best remortgage deals.
Learn more about you can find mortgages with no early repayment charges in our essential guide.
What does remortgage mean?
The definition of a ‘remortgage’ is to change your mortgage deal either with the same lender, or to move to another lender. The new mortgage is used to replace (pay off) your old mortgage and replace it with another loan.
A remortgage is usually much more straight forward than a new mortgage because you won’t have all of the elements of buying a property. For example, in many cases you might not need a valuation, there is no conveyancing, and there are no land searches to perform.
How to remortgage?
There are a few ways that you can go about getting a remortgage for your home, and there are pro’s and con’s for each of them:
1. Speak to your existing lender
Pros
- Can be easier than applying for a new mortgage with another lender
- There might be special rates available to existing customers
- Usually less checks than applying to a new lender or with a broker
Cons
- Deals or rates might not be as competitive as other lenders
- Potentially have restrictions that other lenders don’t have (e.g. LTV or affordability)
- Can have fees that other lenders might not charge
2. Get advice from a broker or mortgage advisor
Pros
- Usually far more choice and lots more options available to you
- Access to better rates and deals from other lenders potentially
- Can get deals from your existing lender and less hassle for you
- Options might be available to you that aren’t available through lenders direct
- Less work and less hassle for you as everything should be done for you
Cons
- Mortgage advisors might charge a fee for their advice
- Potentially higher rates than you might get direct from you lender
3. Apply for a mortgage online
Pros
- Can be done at your own convenience and privately
- Usually lower fees (or free) to apply online
- Might have online deals that aren’t available elsewhere
Cons
- Can be difficult to do everything yourself without any help
- Might be higher rates and less choice than getting advice
- Easier for things to go wrong if it’s not a simple case
- Not good for people with complex incomes or difficult situations
Can you remortgage early?
Remortgaging early usually refers to taking a new mortgage within a special deal rate (e.g. fixed or discount) where an early repayment charge (ERC) might apply. Some lenders will require you to pay an early repayment charge for the full period of your special deal, or maybe even beyond it.
Yes, you can remortgage your property at almost any time and change to another lender or deal and there should be no restrictions for this.
If you decide to remortgage your property early then you should make sure that it is the right thing to do. There are a number of reasons why you might want to or even need to consider remortgaging early.
You might also be able to speak to your existing lender to arrange a ‘further advance’ on your existing loan. This can work out more cost effective as there will be no need to replace your current deal and no early repayment charge.
Can you remortgage with bad credit?
It is often possible to take out a new mortgage deal or switch to another lender if you have poor credit or adverse credit. Some of the main things that are classed as poor credit are:
- Missed credit payments (e.g. Loans, credit cards, store cards, etc.)
- Defaults
- County Court Judgements (CCJs)
- Debt management plans
- Individual Voluntary Arrangements (IVAs)
- Missed mortgage payments
There are usually some extra things to take in to consideration where you have a history of bad credit. Some of the other points that you’ll need to think about include:
- Higher mortgage rates (adverse credit rates tend to higher)
- Mortgage advice fees (brokers and advisors may charge more for their advice)
- Lender restrictions (e.g. lower loan-to-value or income multiples)
- Specialist lenders (High street lenders may not lend)
- Offers and promotions (you may not have access to exclusive deals and offers)
You may also want to consider looking at ways to improve your credit rating over a period of time before you consider a remortgage. There are a number of ways to get better rates by managing and increasing your credit score which can help to increase your choice and reduce mortgage rates.
For more information on accessing a mortgage with poor credit CLICK HERE.
Help to buy remortgages
If you own a property that was purchased under the governments 2013 Help-to-Buy loan scheme, then there are some additional factors to consider when remortgaging.
The 2013 Help-to-Buy scheme was launched by the government to give first-time buyers an opportunity to purchase a home. The scheme provided borrowers with a 5% deposit an additional 20% of funding to help them to access 75% mortgage deals.
Once your initial mortgage deal comes to an end (usually from 2yrs to 5yrs), then you would revert to the lenders Standard Variable Rate (SVR). In almost all instances, the standard variable rate will be higher and therefore mortgage payments will increase.
There will be options available to you usually, as long as you have increased the equity in your home, you have sufficient income, and your credit rating is satisfactory.
How long does a remortgage take?
Often people are put off considering a remortgage on their property because they think it will be difficult and time consuming.
The reality is that the process of remortgaging your home can be simple and fairly quick, especially when speaking to a mortgage advisor. You should find that the number of checks will significantly reduce compared to when buying a property.
It can take as little as a week or two to complete a remortgage if it is simple with no complications. Things may take slightly longer if additional information is required, such as:
- Valuation reports
- Accountants reference
- ID verification
Your mortgage advisor will also be able to help you to submit this information to your lender to save time.
Useful resources
Gov.uk – How to remortgage your Help to Buy home and borrow more money
Gov.uk – How to repay your equity loan when you remortgage
Bank of England – Mortgage Lenders and Administrators Statistics 2022
Financial Conduct Authority (FCA) – Mortgage lending statistics June 2022