How to remortgage: a step-by-step guide
Mortgages are long-term commitments 25 years is typical but you dont have to stick with the same product for the whole term of the loan. Remortgaging is the process of switching what you owe into a new mortgage product that might be with your current lender, or a different bank or building society altogether. Our step-by-step guide below explains the process.
1. Think about why you want to remortgage
Most people remortgage in order to cut the cost of monthly repayments, particularly when they come to the end of a short-term deal. But there are other reasons to consider remortgaging: to switch from a standard variable rate to a fixed or capped rate to get certainty of repayments; to switch to a more flexible mortgage; or to release equity in your property if it has risen in value.
2. Start doing the sums
To work out whether remortgaging will save you money, youre going to need to do some sums, or get a specialist mortgage adviser to do them for you. Taking advice when remortgaging makes sense because an expert will help you find the best deals in the market and advise you on how much you stand to save.
To do the sums yourself, add up the monthly repayments proposed on your new mortgage over the term of the deal. Then add up the repayments due on your current mortgage product over the same period. You will also need to take into account all charges such as any exit penalties levied by your current lender and arrangement fees on the new deal. Taking everything into account, you should be able to see which is the cheaper product.
3. Consider affordability
Bear in mind that cheapest doesnt always mean best. Also think about what suits your circumstances. If, for example, you would be unable to afford the repayments in the event of the mortgage interest rate rising, look for a fixed-rate product that offers certainty about what youll pay.
4. Approach your current lender
Once youve found a new mortgage deal, its worth giving your current lender a chance to match the terms, even if its advertised products are inferior. It may be keen to fight to keep your business.
5. Make the application
When youve made a final decision about which product you want, youll need to complete an application form. The lender will subject the application to a credit check and may ask you to provide additional documentation such as proof of earnings. It may also want to survey your property to establish its value. If it is happy to lend to you, it will issue you with a formal mortgage offer, including a key facts illustration laying out the terms and conditions of the loan.
6. Find a legal expert
Borrowers who are remortgaging will usually need a solicitor to handle the legal side of the transaction. Some lenders operate using a panel of firms while others leave the choice to you. The solicitor will handle the paperwork and arrange for the transfer of funds once the remortgage is complete.
Take independent advice
Anyone remortgaging should consider taking expert advice on the process. An independent adviser will help you choose the right type of product, help you identify the best deals and support you through the transaction.
Our expert advisers will undertake a comprehensive search of the market looking at thousands of products to ensure they find what suits your needs. And because our staff are paid a fixed salary and dont receive commission you can be confident that theyre focused on getting you the very best deal.
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