Compare mortgage deals without affecting your credit score
Access competitive rates and specialist lending options
Tailored guidance & clarity on complex terms
Remortgaging is when you change the current mortgage you have to a new deal. You can do this by switching lenders entirely or moving on to a new deal with the same lender. The main reason most people consider remortgaging is to save money. However, the benefits of remortgaging are different for everyone depending on your current situation. If the following criteria apply to you, it is likely you could save a lot of money by remortgaging.
Most of the best mortgage deals last between 2 and 5 years. Once this term is up, you will be automatically placed on your lender's default Standard Variable Rate. These usually have some of the highest interest rates offered by your lender, so it's definitely worth remortgaging before your current deal runs out to prevent you from being overcharged. Try and make the switch to a deal with lower interest rates about 14 weeks before your current deal ends.
If the value of your home has gone up significantly since you took out your current mortgage, your loan-to-value ratio will have decreased. This is the amount you borrow for your mortgage as a proportion of the total value of your property. If your LTV ratio is lower than before, you could be entitled to better rates. If this is the case, you should compare the market to see if you can find a better deal. However, you should consider any early repayment charges that your lender could hit you with to see if switching will actually save you money.
Any increase in the Bank of England's base rate could adversely affect your mortgage payments if you're on a variable rate. If you are on such a rate, it could be worth remortgaging to a fixed rate deal, which would ensure your interest rates won't go up or down over your term and thus give you more security. Again, consider any early repayment charges before you decide if a remortgage is right for you.
If you've recently inherited some money or had a pay rise or bonus, you might want to use some of those extra funds to go towards paying off your mortgage. However, a lot of lenders won't let you increase your monthly payments or pay off a large chunk all at once. If this is the case, it could be worth remortgaging to find a better deal that works for you. By reducing the amount you need to borrow, you can save money by finding cheaper rates. However, you need to consider early repayment charges to work out if switching will save you money.
You might want to take out a higher loan in order to build that extension or to pay off other debts. Many lenders will refuse to lend you more money or will offer you higher loans but with poor rates. In these cases, it could be worth remortgaging to a different lender so you can raise more money on lower rates. Your lender will ask what your higher loans are needed for, and you will usually be asked for evidence, for example a builder quote if you are doing work to your property.
It could be possible that your life has had a sudden change of direction. Maybe you've decided to go back to university, or you want to travel the world for a few months. Being tied into a mortgage can be a hinderance to people that want to do these things, especially with lenders who won't let you miss any payments. However, there are mortgages available that give you a lot more flexibility and that allow you to take payment holidays. While remortgaging to a more flexible deal will allow you more freedom in your life, they will come at a price. They will normally have higher interest rates, so you will have to chose between flexibility and cost-efficiency.
With a fixed rate mortgage, your monthly payments and interest rate will stay the same for the full length of your term. They typically last between 2 to 5 years, but longer terms can also be found. At the end of a fixed rate deal you will be automatically switched onto a standard variable rate, which are normally the most expensive available.
These remortgages are generally not advisable as there are usually always cheaper options available. They are the default rates that your lender will place you on if you let your term expire without remortgaging. The interest rates vary hugely between lenders but will typically be higher than the Bank of England base rate.
These are the same as SVR mortgages, although they include a discounted rate for a set amount of time. However, although the discounted offer will be lower than the lender's own SVR, they may still be higher than other lenders' SVRs, so are rarely the cheapest deal available even though they have discount' in their title.
Tracker mortgages have a variable interest rate that could be set below, above or at the same rate as the Bank of England base rate. Your monthly repayments will rise and fall in line with changes in the Bank of England's rates. This will be beneficial to you when interest rates are falling, but of course they can also rise, so you need to be confident that you can afford any increases in your monthly repayments in the case of any increases.
This is a variable rate mortgage with a cap in place to limit how high the interest rates can go. These could be good for you if you want a variable rate that could go up or down, but don't want to be hit with dramatic price increases that could make your repayments unaffordable.
Offset mortgages reduce the interest you pay by using your savings to lower your mortgage balance. For example, with £20,000 in savings and a £200,000 mortgage, you pay interest on only £180,000. This can be beneficial if you have significant savings, but note that you won’t earn interest on those savings and some lenders may restrict access to them.
The cost of remortgaging depends on factors such as your current and new lenders. Be aware of any additional fees, and always compare your potential savings against these costs to ensure remortgaging is financially worthwhile.
If you want to remortgage before the term on your current mortgage has expired, you will often be charged an early repayment fee or exit fee. This will vary depending on your lender, so make sure you are aware of any exit fees before switching.
Most remortgages will include an arrangement fee, which apply to all new mortgages. These can sometimes be as high as £2,000. There can also be added admin fees on top of the set arrangement fee, which go towards the cost of setting up your remortgage.
If you want to remortgage with a new lender, you may need a solicitor to deal with any legal matters. This will also set you back with legal fees, although they can vary widely depending on who you use. However, some lenders may offer to pay for your legal fees to entice you into remortgaging with them.
In order to remortgage, you will need to have your home valued so that the lender can see if it's worth remortgaging you. You can challenge your lender's valuation if you don't agree with it, although this comes with further fees and can often be expensive. Only challenge your lender's valuation if you are certain they have undervalued it.
In order to see if you can save money by remortgaging, you need to shop around and compare the different offers available. Make sure you calculate any long-term savings you can make by including the additional fees you will incur for leaving your current mortgage early.
You can use a comparison tool to see if it's worth it. You will be asked for the amount you want to borrow, the length of time you want to borrow for and the value of your property.
Any lender you remortgage with will also need to know about your financial security and your credit history. If your current mortgage term is coming to an end, try and compare the market and remortgage early to prevent you from being put on an expensive standard variable rate.
.jpeg)