Understanding Remortgaging
A comprehensive guide to switching your mortgage deal and potentially saving thousands of pounds.
What is Remortgaging?
Remortgaging means switching your existing mortgage to a new deal, either with your current lender (product transfer) or a different lender. It's one of the most effective ways to reduce your monthly payments and save money over the life of your mortgage.
Most people remortgage when their initial fixed-rate, tracker, or discount period ends and they revert to their lender's Standard Variable Rate (SVR), which is typically much higher than fixed-rate deals.
When Should You Remortgage?
1. Fixed Rate Period Ending (Most Common)
Your lender will typically write to you 3-6 months before your fixed term ends. This is the ideal time to start shopping for a new deal. If you don't remortgage, you'll move to the SVR, which can be 2-3% higher.
2. Interest Rates Have Dropped
If market rates have fallen significantly since you took out your mortgage, remortgaging could save you money even during a fixed period (though early repayment charges may apply).
3. Improved Loan-to-Value (LTV)
If your property value has increased or you've paid down your mortgage, you'll have a better LTV ratio, giving you access to cheaper mortgage rates.
4. To Borrow More (Remortgage and Further Advance)
You can remortgage to release equity for home improvements, debt consolidation, or other purposes. This is often cheaper than personal loans or credit cards.
The Remortgaging Process
Review Your Current Mortgage (3-6 months before end date)
Check your outstanding balance, remaining term, current rate, and any early repayment charges.
Shop Around for Deals
Compare rates from multiple lenders, use comparison sites, or consult a mortgage broker who can access exclusive deals.
Apply for New Mortgage (Decision in Principle)
Submit your application with proof of income, identity, and address. Lender will value your property.
Mortgage Offer and Legal Work
Once approved, your solicitor will handle the legal transfer. This typically takes 4-8 weeks.
Completion
New mortgage starts, old mortgage is paid off. Start making payments to your new lender.
Costs to Consider
Remortgaging involves several costs. Factor these into your calculations to ensure switching will save you money overall.
| Cost | Typical Range | Notes |
|---|---|---|
| Arrangement Fee | £0 - £2,000 | Can often be added to mortgage |
| Valuation Fee | £0 - £1,500 | Often free or discounted |
| Legal Fees | £300 - £1,000 | Sometimes covered by lender |
| Early Repayment Charge | 1% - 5% of balance | Only if within fixed period |
| Broker Fee | £0 - £500 | Optional but can save time |
| Typical Total | £300 - £2,500 | Without ERCs |
Benefits and Considerations
Benefits of Remortgaging
- ✓Save hundreds or thousands per year on interest
- ✓Lock in a competitive fixed rate for 2, 5, or 10 years
- ✓Access better rates with improved LTV
- ✓Release equity for home improvements or other purposes
- ✓Reduce monthly payments or shorten mortgage term
- ✓Switch from interest-only to repayment mortgage
Important Considerations
- !Early repayment charges can be substantial (check first)
- !Remortgaging costs may offset short-term savings
- !Your circumstances may have changed (income, credit score)
- !Property value may have decreased, reducing options
- !Process takes 4-8 weeks - start early to avoid SVR
- !Some deals have high fees that outweigh lower rates
Tips for Successful Remortgaging
Start Early
Begin shopping around 3-6 months before your deal ends. Some lenders allow you to lock in a rate up to 6 months in advance.
Check Your Credit Score
Review your credit report for errors and take steps to improve your score. A better score means better rates.
Use a Mortgage Broker
Brokers have access to exclusive deals, can navigate complex situations, and do the legwork for you (often for free).
Consider Total Cost, Not Just Rate
A mortgage with a slightly higher rate but no fees might be cheaper overall than a low-rate deal with £2,000 in fees.
Using Kumberi's Mortgage Calculator
Our mortgage calculator includes comprehensive remortgaging modelling:
- Plan multiple remortgage events throughout your mortgage term
- Model different interest rates and terms for each remortgage period
- Include early repayment charges and remortgaging costs in calculations
- See total interest saved by remortgaging vs staying on SVR
- Visualise your mortgage journey with detailed timeline projections
Important Information
- • This is educational content only and does not constitute financial advice
- • Your home may be repossessed if you do not keep up repayments on your mortgage
- • Always check for early repayment charges before remortgaging
- • Consider consulting an independent mortgage adviser for personalised guidance
- • Rates and deals change frequently - check current offerings before deciding
Further Resources
- MoneyHelper – Choosing a mortgage
Free, impartial guidance on comparing mortgage deals
- MoneyHelper – Preparing for interest rate changes
How rate changes can affect mortgage payments
- FCA – Support with mortgages and interest rates
Regulator guidance for mortgage customers
- GOV.UK – Housing and local services
Official housing and property information
- MoneySavingExpert - Remortgaging Guide
Independent commentary on remortgaging