Remortgaging quick facts:
- Remortgaging is the term applied to moving your mortgage from your existing deal to a new one
- You can usually remortgage at any time, even while you're in a fixed deal
- If you are in a fixed deal, you may face substantial exit fees in remortgaging away from your current lender
- You can consolidate other debts into your home loan by remortgaging, or release equity as cash
- It is possible to 'remortgage' even if you own your property outright, without a current home loan in place
Remortgaging is the term applied to moving the mortgage on your property from one agreement to another, either with the same or different lenders. It is also applied to taking out a mortgage on a property that you own outright in order to release equity.
When would I need to remortgage?
Usually, you would look to remortgage, with the same or a different lender, when your current fixed mortgage deal comes to an end. However, you may choose to remortgage before your fixed deal comes to an end if you find a substantially cheaper interest rate with a different lender, or if you want to secure a current market rate for a longer period of time than your current deal runs for. This might be so that you can accurately identify your economic commitments regarding your medium term mortgage repayments, or to avoid the risk of interest rate rises in the medium term future.
You may also want to remortgage to take advantage of a more flexible agreement, such as the ability to make over payments if your current deal does not allow you to do so.
To work out if it is worth remortgaging if you have early repayment charges you can use our mortgage calculator here.
Do I have to remortgage when my fixed term ends?
You are not obligated to remortgage at any time, even when your current fixed deal comes to an end. You can instead choose to remain with your existing lender and be moved over to its standard variable rate mortgage deal, as long as no other stipulations were made for any other eventuality at this stage when you first agreed the deal. The standard variable rate deal will offer you more flexibility, and will save you remortgaging fees, but may work out to be more expensive overall compared with remortgaging because of a higher interest rate.
Can I remortgage with another lender?
You are not obliged to stay with the same lender when you remortgage, whether or not you are currently in a fixed deal with your existing lender.
What costs are involved with remortgaging?
When you remortgage you may be subject to fees for setting up the new mortgage deal with the new lender. These would be the same as the fees when you originally set up your mortgage, including the arrangement and valuation fees. However, sometimes lenders offer fee-free deals for those remortgaging in order to secure the custom. They also often offer very attractive interest rates to those remortgaging from other financial institutions.
If you are currently in a fixed term you may need to pay an early release fee to your existing lender. You my also have to pay a separate fee to release your deeds.
Can I remortgage while I'm still in a fixed term?
You are usually able to remortgage with a new lender while still within a fixed term with your existing lender. However, there will usually be substantial exit fees to pay to your existing lender when you do so.
Some lenders will also enable you to remortgage internally on occasions, but usually only if you are extending your fixed term, rather than reducing it.
Can I remortgage from any mortgage?
With the vast majority of mortgages, you will be able to remortgage to another lender, subject to the terms and conditions laid out such as fees for exiting fixed deals early. In a small number of mortgage arrangements with special circumstances, you may be prevented form remortgaging. Check with your current lender whether or not you are free to move.
How much will my early release fee from an ongoing fixed deal be?
Your early release fee from an ongoing fixed deal mortgage will usually either be a set amount or a percentage of the repayments that you would have made had your fixed deal run its course. This will have been agreed within your terms and conditions when you originally took the mortgage out.
Do I have to pay off early mortgage release fees immediately?
If you remortgage while still within a fixed term, you can opt to add any early release fees from exiting your existing mortgage to your new mortgage. Bear in mind that this will mean that you will also be paying interest on the extra money that you borrow for this fee, as well as on the money you borrow for the mortgage itself. You do have the option to pay off the early release fee yourself, separately from the new mortgage.
How can I work out if I can save by remortgaging while in a fixed term?
To identify whether or not it's worth remortgaging while in a fixed term, you need to calculate the amount of savings that you would make with your new, lower interest fee over the period remaining on your fixed deal. You need to take into account the early release fee from your existing mortgage, including the interest that you'd pay on that fee if you added it to your new mortgage, as well as any fees that apply for setting up your new mortgage.
Know Your Money has created a free-to-use calculator which can help you to establish your prospective costs and savings when remortgaging while in a fixed deal. Access it here.
Am I eligible to remortgage?
The factors that lenders take into account when you remortgage are much the same as when you take out a mortgage for the first time. This includes your credit history, salary and economic circumstances, including any other debts you are obligated to service. With new stringent regulation in place, lenders will now also check on the affordability of your mortgage repayments, taking into account your other monthly outgoings such as bills, childcare, transportation and even your regular entertainment budget. They will also assess whether the mortgage will be affordable in the event of significant prospective interest rate rises in the future.
One factor that might prevent you from remortgaging is negative equity - where your property has fallen in value since you bought it and you subsequently now owe more on your mortgage than your house is worth.
Can I borrow more money on top of my mortgage when I remortgage?
You my be able to increase your borrowing level and release some of the equity in your home when you remortgage. Reasons why you may wish to do this include to upgrade to a bigger property, to release a cash sum, or to consolidate other debts. Your ability to borrow more - and how much - will be dependent on the particular lender and the deal you opt for, as well as your credit rating, the level of equity you have built up on your property, and your other current economic circumstances.
Can I remortgage if I own my property outright?
If you don't have a mortgage on your property, either because you've paid it off or because you never had one to begin with, you can still remortgage your property to release some equity and provide yourself a capital sum.
Is it beneficial to consolidate my other debts with a remortgage deal?
If you have other debts aside from your mortgage it is sometimes possible to consolidate them all into a new home loan by remortgaging. This can help you to spread the payments of your other debts over a longer time than with other forms of lending. Whether or not it is economically most prudent to do so depends on the interest rate attached to your new mortgage, compared with alternatives such as a personal loan, and the length of term you agree with the new mortgage.
Can I increase or reduce my term when I remortgage?
You may be able to increase your overall mortgage term when you remortgage, meaning that you reduce your monthly repayment commitments or release the equity in your home as capital. By the same token, you may be able to reduce your overall mortgage term by paying down a lump sum from your remaining debt.
I'm moving house - do I need to remortgage?
If you are moving house, you don't usually need to remortgage. You can usually carry your mortgage over to your new property with you, even if you need to borrow more money to fund an upgrade. This is know as mortgage porting. However, the ability to remortgage remains open to you, under the same conditions as with any other circumstance.
Where can I get advice on remortgaging?
If you would like independent help and advice with your remortgaging you can contact a whole-of-market, Financial Conduct Authority regulated mortgage advisor. Know Your Money can arrange for a mortgage advisor that suits your circumstances to contact you and arrange a free consultation. If you are interested in this service, you can get in touch by leaving your details on this secure form.
This guide is intended for general information only and is not intended as, and does not constitute, any form of advice, recommendation or endorsement by us of any particular product(s) or services and you should rely on your own further research and professional advice in relation to your specific requirements and circumstances before purchasing any products or services. Use of this guide is subject to the Terms of Use of the KnowYourMoney site.
If you would like independent help and advice with your remortgaging you can Know Your Money can arrange for a mortgage This guide is intended for
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