Compare Remortgages

What is a remortgage?

A remortgage is when you move your mortgage to a new provider or switch deals with your current lender. If you’re just switching rates with your existing lender, it’s called a product transfer.

You might want to remortgage:

• To save money by securing a lower rate of interest than the deal you are on.
• To avoid going on to your lender’s higher standard variable rate once your initial rate ends.
• To make changes to your mortgage, such as releasing equity from your property, borrowing more, consolidating debts, or to get more flexible terms.

A mortgage term is how long it will take you to pay back your mortgage – 25 years, for example. Remortgage deals are the initial rate of interest you pay for a specific length of time during that period, such as a five-year fixed-rate deal.

How does remortgaging work?

The process of remortgaging will depend on whether you are remortgaging with a new lender or switching to a new deal with your current lender.

Applying for a remortgage with another lender is similar to applying for your original mortgage. The lender will run affordability checks and your property will be valued. How much equity you have in your property will affect the deals you can access and the interest rate you will be offered.

If you’re staying with your current lender and only changing the rate you are on, it’s likely to be more straightforward and happen more swiftly, involve less paperwork and cost less – if anything at all – in product and arrangement fees. But even if you’ve been offered a great follow-on deal, checking deals across providers may open up lower rates, and be worth the extra effort.

If you are looking to borrow more when you remortgage, lenders will run affordability checks to make sure the repayments would be affordable for you. When you use our remortgage comparison tool, you can add this to how much you want to borrow, if this is something you’re considering. This will then be factored into the deal you are matched with. You can then apply directly with the lender or through a mortgage broker.

Is remortgaging a good idea?

Remortgaging isn’t always right for everyone’s situation. For some, remortgaging might save money in interest over time and mean lower monthly payments. For others, it could be financially more sensible to sit tight. In short, it’s a case of doing the maths and picking the right time.

That’s because, as important as how much interest you are charged is, you will also need to factor in any charges or fees for leaving your current provider if you are leaving the deal before it’s due to end. You will also need to bear in mind any set-up charges for your new mortgage, such as product and valuation fees.

If you are staying with your current lender and just moving to a different rate, you may pay less in fees than if you change providers, or even no fees at all. And your lender may waive its early repayment charge towards the end of the initial rate deal.

Some deals with your current lender may have an arrangement fee for setting up the new product, though, so check the features of the offer carefully.

Even with fees deducted, you may find that what you save in interest more than covers them. And if you get a remortgage deal that suits you better, such as an offset mortgage or one that allows overpayments, you might decide it’s worth it over time.

Whether remortgaging to borrow more is a good idea is down to your finances, and if there are alternative ways of borrowing that might be cheaper, such as a credit card or personal loan. The low interest rate might appeal, but you’ll be paying interest on that amount for the lifetime of the mortgage, which can really add up.

If you want to increase your loan amount, or just aren’t sure if remortgaging is right for you, talk to a mortgage broker.

When shouldn’t you remortgage?

You can usually remortgage whenever you like, but there are times when remortgaging with another lender might not be the best move.

If your financial circumstances have changed for the worse since you took out your mortgage, you may benefit from waiting until things have improved. This could be because:

• your credit rating isn’t as good as it was
• your house is worth less then it was when you bought it
• your income has reduced

When you change lenders, there will be affordability checks and a full property valuation. Less favourable circumstances may mean the lowest rates aren’t available to you, and you may find it hard to remortgage.

If you are remortgaging with your current lender and making no changes other than moving to a new initial rate, you won’t usually have affordability checks. Lenders often offer follow-on deals to keep customers, which may not be the lowest across the market, but could be better than ending up on the lender’s SVR.

If you’ve only just agreed to a mortgage deal, penalties for leaving your deal early may be at their highest, and remortgaging may not stack up financially just yet.

If you only have a small mortgage loan amount, perhaps because you’re nearing the end of the full repayment mortgage term, the fees and charges may make it less cost-effective to switch. Also, some lenders have a minimum threshold for lending and may not agree to take on a smaller loan.

What are the benefits of remortgaging?

There are a few ways remortgaging might benefit a homeowner, including:

• Saving money by securing a lower interest rate than your current deal or the lender’s SVR.
• Fixing a rate for a specific number of years to get predictable monthly payments.
• Switching from a fixed deal to a variable interest rate without an early repayment charge if you are considering moving home in the near future.
• Benefiting from a lower loan-to-value (LTV) ratio, which opens up more competitive interest rates. This could be since the market value of your home has gone up over time or you’ve paid off a good amount of capital (or both).
• Borrowing more when you need a lump sum, perhaps for renovations – though you will be increasing your debt and paying more in interest.
• Getting a more flexible type of mortgage, where overpayments allow you to pay off the loan sooner, or one that lets you port your mortgage to another property if you move.

Are there any downsides to remortgaging?

When you remortgage, you may need to pay the same type of fees you paid when you first applied for a mortgage. This can include an arrangement fee, booking fee, valuation fee and legal fees, though some lenders offer fee-free switches.

If you remortgage before the end of your current deal you could face an early repayment charge. This is usually between 1% and 5% of what is left to pay on the mortgage loan. You may also pay an exit fee for closing the account during the tie-in period.

The lender’s tie-in period should be detailed in your mortgage documents. It’s possible for it to stretch beyond the end of the deal’s term, known as an overhang clause.

If you need to pay an early repayment charge, you can pay it up front or it can usually be added to your mortgage loan with your new provider. If you take the latter option, you will pay interest on a larger amount.

There will also be some form-filling and other admin, though this may be minimal if you are remortgaging with your current lender and only changing the rate you are on.

How do I get the best remortgage deal?

Searching across a number of mortgage lenders will give you a wider picture of the rates and remortgage types available to you. To run a search across the whole market, you can use our comparison tool to compare the fees, rates and features of deals matched to you.

It also makes sense to check what your current provider can offer you. If you’re nearing the end of your initial rate, your provider will usually get in touch in advance and explain the deals on offer. Ideally, start looking into your options around six months before you plan to switch.

If your current deal has no early repayment charge, you might want to check the market annually, so you can take advantage of new, competitive deals on the market that might save you money.

Why should I remortgage?

There are all sorts of reasons for remortgaging. The most obvious is to save money and get a better rate, but to be more specific:

• Your current deal is due to end, and you want to avoid being moved to your lender’s standard rate, which is usually higher.
• There are better rates available than the rate you are currently paying. This is where reviewing your mortgage regularly may reap rewards.
• You’re concerned about possible future interest rate rises and want to secure a fixed deal.

If you’re looking to remortgage to borrow more, or extend your mortgage term to get lower monthly payments, look beyond the rate of interest offered. Even if the interest rate is lower than for some credit card or personal loans, if you extend your mortgage term, you’ll be paying the loan off for longer and will pay more in interest over time. So always look at the total cost over time, and check if there are cheaper ways to borrow.

You can use a remortgage calculator and personal loan calculator to compare the overall cost of each option.

Consider talking to a mortgage adviser if you’re not sure if remortgaging might work for you.

How to remortgage

Before you go ahead, do some quick preparations. Make sure you know these details about your current agreement, including:

• What rate of interest are you on, and what are your monthly payments?
• How long is left on your mortgage term, and how much of your loan is left to pay off?
• If there is a lock-in period, when does it end, and how much would the early repayment charge when you’re looking to switch?

The remortgage process depends on if you are simply switching rates with your current lender, making other changes, or are moving your mortgage to another lender.

If you’re staying with the same lender, you may be able to make the switch in the final few months of your current deal with no exit or set-up fees to pay. Your lender will usually contact you to outline your options, and how to apply, a few months ahead of time.

For a straightforward product transfer where you’re only changing the rate you won’t usually have affordability checks and the admin should be minimal. You won’t usually need to use a solicitor for a simple, internal switch.

If you’re changing lenders, or changing the terms of your deal such as borrowing more, you’ll likely need to provide the same information as when you bought your property. The process will also usually take a little longer, due to the extra admin and checks, but if the sums add up it may be worth it.

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