Key Takeaways

  • Remortgaging involves moving your mortgage to a new lender. This might be to take advantage of cheaper interest rates, change your terms or borrow moreIf you have enough equity you can borrow more to finance home improvements, consolidate debts, or fund one-off purchases
  • You will need to complete some legal work if you move your mortgage, known as conveyancing
  • Be aware of any Early Repayment Charges you may have to pay if you remortgage
  • A product transfer allows you to remain with your current lender and take advantage of a new mortgage deal

What is a Remortgage?

A Remortgage is when a homeowner moves their mortgage from one provider to another. When Remortgaging, the homeowner may borrow extra funds, amend their terms, or repay their Mortgage. 

Looking For Mortgage Advice?

If you're thinking about your mortgage options ahead of a remortgage, a big move, or even to borrow more?
We can help you find a mortgage specialist to offer you the very best advice. Complete our Sunny Fact Find form to provide us a bit more detail about your circumstances and we'll find the best-suited adviser for your needs.
Your appointed adviser will contact you to discuss how they can help, you decide how to proceed.

Why Remortgage?

Most people Remortgage to take advantage of better interest rates available with other lenders. You can also remortgage to borrow more, or change the terms of your existing mortgage. You may decide to reduce the overall term and pay more.

For example:

If your current provider can only offer a 3% 2-year fixed rate. Another provider is offering 2% for the same term. You would save interest on your repayments by moving to a new lender via a remortgage.how does remortgaging work

How Long Does a Remortgage Take to Complete?

You can complete a remortgage around a 2-month timeframe. This will depend on how straightforward the case is and how quickly the conveyancing work will take. It is possible to remortgage in as little as 2 weeks. However, to do that, an electronic survey will be required. It is done to the lender to decide what survey to perform, based on your Loan to Value. 

Ultimately, the time required to complete will be dependent on your solicitors.

Can I Borrow More When I Remortgage?

If you have enough equity and pass affordability checks, you may be able to borrow more. When you complete on your mortgage, your solicitor will arrange a mortgage settlement amount to repay your old mortgage. The money left over after this will be paid to your bank account. You will need to declare your intention to borrow more to your lender. This is made more possible by remortgaging when house value has increased.

What can you use the money for?

The funds can then be used for reasons such as:

  • Home improvements
  • Debt consolidation
  • Raising a deposit for another property
  • Gifting funds for your children to buy property
  • Car purchase

if you borrow more on your mortgage, you may be spreading the cost over a longer term than a personal loan would. That could mean you pay more interest overall.

This also applies if you are consolidating debts. Although your outgoings might be less overall. You may pay more interest by the end of the term.

Some lenders prevent you from consolidating debts over a term longer than 10 years. Your Mortgage adviser will need to declare the reason why you are borrowing extra. This is to ensure they offer the correct advice.

When Should You Review your Mortgage?

To determine when you to review your mortgage you will need to understand when the early repayment charges are removed.

Moving your mortgage before the end of your product will result in charges from your existing lender. 

Your mortgage adviser should make you aware of any early repayment charges you will incur.

It does not normally work out financially to remortgage and pay the early repayment charges.

Early repayment charges (ERCs) normally decrease year on year until about 3-6 months before the end of the product term, when they move to 0%.

When the ERCs are removed, your Mortgage interest rate will move to the Standard Variable Rate (SVR). This is a period where you are free to look at Remortgaging without incurring a fee. However, interest rates can be higher on the SVR and it will be a good idea to move onto a new agreed rate as soon as possible to avoid paying higher interest.

The Information about your early repayment charges is provided on your Mortgage Key Facts illustration document. That is a document provided to you as part of your Mortgage offer.

Can you Remortgage Early? 

Yes, you can Remortgage at any time. However, if you remortgage early, you may face an ‘early repayment charge’ until at least 6 months before your current mortgage product expires. Each Mortgage will be different. You can find your early repayment charges in your Mortgage key facts document. For more information on early repayment charges and remortgaging early, review our insight 'Can you remortgage early?'

Who Should You Remortgage to?

Seeking Mortgage advice is about what is important to you and your personal circumstances. When it comes to remortgaging, a mortgage adviser will help you to understand what level of stability or flexibility you may need.

Once you and your adviser have established which mortgage product is right for you, they will be able to review their panel of lenders to see who has a Mortgage product that can meet your needs. 

Mortgage terms vary from lender to lender, it may not always be a case of who has the cheapest product available. 

For example, If you are going to be making overpayments, you may need a Mortgage product that allows for this which may not necessarily be the cheapest.

Remortgage Valuations

If you are considering remortgaging you will need to have an idea as to how much your property is valued. The valuation figure that you provide to the lender will be used for assessing the application. The interest rates you are eligible for will be determined by your Loan-to-Value which is calculated using this provided value. However, once you proceed to the application stage, there will then be an official property valuation conducted. Some properties will have digital valuations, some will have a drive-by valuation.

There are factors that influence which type of valuation you will need, such as:

Equity in your Property

if you have a Loan to Value of less than 60% and are not too close to the bracket, your lender may determine your valuation based on statistics of local sales

If your property valuation is in line with local sales

If the lender thinks your valuation is not in line with sales from the local area and appears that you may have made a mistake then a standard valuation will be conducted. If your valuation comes back in line, you proceed with your application.

If your valuation falls short of what you have stated, then you may need to take a step back and re-review the products that are available now that the valuation figure has been confirmed.

If your valuation is quite a way off what you expected, it may move your Loan to Value to a different product LTV range. That means your interest rate might be higher. Your Mortgage adviser will explain how your valuation has impacted any products you were applying for.

The remortgage market is competitive and often there are incentives available for remortgaging to a new provider. One common incentive is free conveyancing for remortgages.

Conveyancing for a Remortgage

Once your valuation is confirmed, a conveyancer can be appointed. Your Mortgage adviser can help you with this and you will then receive a welcome pack from your conveyancer. It contains a questionnaire for you to complete.

There is only a small amount of legal work (conveyancing) to be completed when Remortgaging, but Conveyancing for remortgages can still take up to 2 months. Your conveyancer will deal with the settling of the old mortgage account upon completion as well as raising the required Charges with the land registry. 

Most lenders cover the conveyancing for free as they compete for your business. However, not all do. 

Your Mortgage adviser will inform you of any charges that would be required for conveyancing work. A standard remortgage conveyancing fee could be as little as £250. For more information on conveyancing and remortgaging, review our insight: "Do I need a solicitor to remortgage?".

What is a Product Transfer?

A product transfer is when you decide to stay with your existing lender and select a new deal. This is often much quicker than remortgaging, but you may not have access to a Mortgage as competitively priced as what is being offered by other lenders.

Your Mortgage adviser will still be able to help you with a product transfer. You do not have to go direct. By speaking with a Mortgage adviser at the end of your term you will be able to obtain all information and options available to you.

It is rare that product transfers come with incentives. However, there is no legal work to be completed.

Product transfers often do not require further income verification checks. This would be a step that is required for remortgaging with a new lender as they will want to confirm you can afford the loan they are agreeing to.

Looking For Mortgage Advice?

If you're thinking about your mortgage options ahead of a remortgage, a big move, or even to borrow more?
We can help you find a mortgage specialist to offer you the very best advice. Complete our Sunny Fact Find form to provide us a bit more detail about your circumstances and we'll find the best-suited adviser for your needs.
Your appointed adviser will contact you to discuss how they can help, you decide how to proceed.

Remortgage Advice

When it comes to remortgaging, seeking advice from an expert is a good idea. A remortgage advisor can help you decide if it's the right choice for you. They can guide you in finding the best deals, comparing interest rates and fees from different lenders. They'll explain the potential savings and costs involved, so you can make a smart decision and get a better mortgage deal that fits your needs.

A Remortgage is when you move your borrowing from one provider to another. This is usually done when your product has finished, and you have no early repayment charges to pay the loan back.

When Remortgaging you should be aware of any early repayment charges (ERC's) you may face. When your loan settlement figure is provided this will show the fees you need to pay to clear the loan. They vary between 1-5% and can fully drop off 3-6 months before the end of the term. If you are looking to Remortgage to save money, you should take into account the ERC's you have to pay first as it may not be worth Remortgaging after all costs are considered.

You will still need to verify your income to ensure the existing loan is still affordable. You can provide your last 3 months' payslips, or if self-employed your last 2-3 years SA302's. 3 months' banks statements, proof of address, and identification can also be requested.

Everyone's circumstances differ, and it's important to review yours fully before making any decisions around Remortgaging. A Remortgage might be an option if you are looking to borrow additional funds or save money with a cheaper interest rate. However, it won't always be this straightforward. It's a good idea to seek advice from a Mortgage Adviser to help ensure you end up in the position you want to be in.

No, but you will generally need at least 10% equity. That means your loan is less than 90% of the value of your home.

The banks will assess your mortgage and eligibility by looking at your loan-to-value ratio. That is the amount of borrowing you have against the present value of your home. Expressed as a percentage, the rates are determined by the tiers into which LTV percentage falls. For example, 80-90% LTV could be a tier with one interest rate, and 70-80% may be another. When Remortgaging it's a good idea to obtain more information about the tier levels, and how much would be required to overpay to drop to a lower bracket. If a higher valuation is returned it may help reduce your LTV.

SVR is an abbreviation for Standard Variable Rate. This is the default interest rate you fall onto once your fixed rate comes to an end on your mortgage. It generally can be more expensive than fixed terms. Once on the SVR, you can overpay without penalty.

You can speak with a Mortgage adviser. They will need to know your outstanding loan amount, the value of your property, and the term remaining. They can calculate your expected repayments if you Remortgage and whether that could save you money. You can Remortgage online, but a mortgage adviser could help ensure you are looking at the correct products for you whilst assisting with administration.

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