Remortgage
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Remortgage (Part 1)
What is a remortgage and how does the process work?
A remortgage is where your deal is expiring and you arrange a new product before your current one ends. Obviously, you need to look at it a while before your deal runs out.
We’ll talk about the rates you want to go on to and explain all the figures. Once that’s done, we apply for the new mortgage – either staying with your same lender or going to a new bank.
How long does it take to remortgage? How often can I remortgage my property?
It really depends. It’s around two weeks to get a mortgage offer, where the bank’s giving you the thumbs up, and then another two weeks to complete the solicitor’s side of things. That’s a rough timescale.
If you’ve got early repayment charges on your current fixed rate deal, we won’t complete the new mortgage before that expiry date. There’s no need to pay those charges. If we stay with the same lender, it’s called a product transfer or a rate switch – and that could just take a matter of hours.
In terms of how often you could remortgage your property, I wouldn’t make a habit of it. It’s not something you would do every other month. There’s no real benefit, depending on the deal you’re on. If you’re fixed in, with early repayment charges, it’s unlikely you’d remortgage. Generally you would start looking to remortgage four months before your deal comes to expire.
If you’re on a variable rate, like a tracker or discount with no early repayment charges, it’s up to you whether to remortgage. Rates may be better elsewhere, or you may want to fix in with another lender.
What are the main reasons why people choose to remortgage? Can I remortgage to consolidate my debts?
The most common one is that your deal is about to expire. Some people may want to remortgage to raise equity for home improvements or a vast array of other reasons.
You can consolidate debt, but it would need to make financial sense – looking at the rates you’ll be charged at the time, rates going forward, whether there’s going to be a saving and whether it makes things more manageable. We would discuss with you whether it’s better to do it or not.
Consolidating debt can be beneficial. If you’re going to consolidate credit cards and loans onto your mortgage, you’re going to be paying less each month, so it’s definitely going to be more manageable.
But you’re taking potentially a loan on a term of four to five years and stretching it over 30 years – so you’ll pay back a lot more in interest over time. It can be a helpful short-term solution, but it’s important to consider how to pay it off a bit faster.
What factors should I consider when deciding whether to remortgage?
The main attraction of remortgaging is to avoid going onto the Standard Variable Rate. If you’re not on a specific product, the banks will charge you this rate and it’s very unlikely to be worthwhile. It could be up to double current fixed rates.
So when considering whether you should remortgage, we would look at current rates and what deal you’d have if you don’t choose another product.
What are the advantages and disadvantages of fixed rate versus variable rate remortgages?
With a fixed rate, you know exactly what you’re going to be paying every month. That suits most people.
Meanwhile, a variable rate will go up and down in line with the lender’s Standard Variable Rate.
Where it moves often or not, it tends to be higher than a fixed rate, depending on the lender. There aren’t many reasons to choose a variable rate – there are usually better options.
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What happens to my existing mortgage when I remortgage?
The main two options when you remortgage is either to stay with your current lender or to switch. We’ll work out what’s more cost effective for you.
If you stay with the same lender, you just take a different product code, fixing you into a different deal on a product that best suits you. If we’re borrowing more money, that’s a separate thing. That extra amount of money may have another rate.
If we change lenders, that puts a new legal charge on your house. The solicitor manages that and will pay off your current loan using the new mortgage funds. Your mortgage essentially reappears with another bank, potentially at a slightly better rate.
What happens if I don’t remortgage after my deal expires?
Very simply, your rate is going to go up a lot. There really aren’t many reasons to go on to the standard variable rate – other than forgetting to remortgage.
Some people might go on the standard variable rate because there’s a change coming up and their current lender can’t offer a product with no early repayment charges. You might do that if you’re looking to sell your home in the near future.
Remember that lenders want you to go on to the Standard Variable Rate, because that’s where they make their profit.
Can I remortgage if I have bad credit?
Yes. if you stay with the same lender they won’t do many checks, because they’ve already assessed that you’re a good candidate and you’ve been repaying the loan with them.
So if you do have bad credit, your current lender will usually let you stay with them. There can be some caveats, but it just depends on the lender. If we switch lenders, they will look at your credit profile.
If you’re already with a specialist lender that deals with adverse credit, it may be beneficial to switch. But often, if you experience recent credit issues and there was no previous adverse credit, it’s best to stay with your lender until the issue becomes more historic.
Will I have to pay any fees or penalties when remortgaging?
We will always time it correctly so that there won’t be any charges. We’re going to wait until any early repayment charges have ended. If your deal ends at the end of the month, the new product tends to complete on the first or second so there will be no charge to pay.
In terms of other costs, some brokerages will charge a fee, but we don’t. There are no charges on our side. There will potentially be valuation fees, although most lenders don’t have those.
If we’re changing lenders, there may be a small admin fee to close down your current mortgage. We’ll factor that into the cost effectiveness of switching. Most of the time, lenders cover the legal costs of a remortgage, but there may be a nominal charge depending on the deal.
Obviously, every fee will be discussed with you as part of working out whether it’s worth staying with your current lender or going somewhere else.
You’ve demonstrated how a mortgage broker can help. Is there anything else we need to know?
There are two main reasons you go to a broker. The majority of people come to us to get the right deal. It might just be picking the cheapest or, in complex circumstances, finding which lender is best placed for you at the cheapest rate.
Everyone’s lives are busy, having to think about a million things – a mortgage can feel like an unnecessary hassle, sometimes. But it’s easy to have a quick conversation and leave it with us. We’ll keep you updated throughout the whole process and do all the heavy lifting. That’s why you’d come to us for a remortgage.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
Podcast recorded 04/2025