Remortgaging is a significant financial decision for homeowners, and it comes with plenty of questions. Whether you’re a first-time remortgager or considering switching deals to save money, understanding the process is essential. Here, we answer some of the top questions about remortgaging to help you make an informed choice.
What Is Remortgaging?
Remortgaging is the process of switching your existing mortgage to a new deal with a different lender than you have currently. It often involves paying off your current mortgage and replacing it with a new loan. Homeowners typically remortgage to secure a better interest rate, or adjust their repayment terms.
When Should I Consider Remortgaging?
The right time to remortgage is typically:
- When your fixed-rate deal ends: Standard Variable Rates (SVRs) are often higher, so switching can save you money.
- To access better interest rates: If rates have dropped since you took out your current mortgage.
- If your property value has increased: A higher property valuation could make you eligible for lower rates.
Can I Remortgage with the Same Lender?
Yes, and this is often called a “product transfer.” Staying with your current lender may save time and avoid legal fees, but it’s still worth shopping around for the right deal for you. Sometimes, other lenders can offer significantly better rates.
How Much Does Remortgaging Cost?
Remortgaging isn’t always free. Costs may include:
- Lender Arrangement fees: For the new mortgage (often £500–£1,500) – some lenders don’t have an arrangement fee so it’s advised to compare lenders.
- Legal fees: Typically lower than when buying a home, but still an expense.
- Valuation fees: Some lenders offer free valuations for remortgaging, but not all.
- Early repayment charges (ERC): If you exit your current mortgage deal early.
How Long Does It Take to Remortgage?
On average, remortgaging takes 4–8 weeks, depending on your lender and circumstances. Having all required documents ready can help speed up the process.
Does my Credit Score Affect my Ability to Get a Mortgage?
Yes. Lenders assess risk based on your credit score, so a lower score might result in higher interest rates. Consulting a specialist mortgage broker can help you find the right deal for your situation.
Do I Need a Valuation for Remortgaging?
Most lenders require a valuation of your property to confirm its market value. Many offer free valuations for remortgaging customers, but check if this applies to your deal.
What Documents Do I Need to Remortgage?
To apply for a remortgage, you’ll typically need:
- Proof of income (pay slips, tax returns).
- Bank statements (to show financial stability).
- ID and proof of address.
- Details of your current mortgage and property.
Can I Be Rejected for a Remortgage?
Yes, common reasons for rejection include:
- Reduced credit score.
- Insufficient equity in your home.
- Inadequate income to support the new loan.
- Errors in your application or missing documents.
What Happens If I Don’t Remortgage?
If you don’t remortgage when your fixed term ends, your mortgage usually reverts to your lender’s SVR, which is often higher than fixed or tracker rates. This could lead to higher monthly repayments.
Should I Use a Mortgage Broker?
A mortgage broker can help you navigate the remortgaging process, compare deals, access products and lender you can’t access directly and find products tailored to your financial situation.
Can I Overpay on My New Mortgage?
Many remortgage deals allow overpayments, typically up to 10% of the loan balance per year without penalty. This can help reduce your loan term and total interest paid. You should refer to your offer to see if the 10% overpayment is available.
What’s the Difference Between Fixed and Variable Rates?
- Fixed Rates: Stay consistent for a set term, offering predictability.
- Variable Rates: Can fluctuate based on market conditions, which may result in lower or higher payments.
Remortgaging can be a powerful financial tool, but it requires careful consideration and planning. By addressing these common questions, you’ll be better prepared to make informed decisions about your property and finances.
At 3mc, we have a team of expert advisers who can discuss all your mortgage requirements. If you would like to discuss your options, give the 3mc team a call on 0161 962 7800.
All calls are recorded for training and monitoring purposes. 3mc for intermediaries only.
*Your home may be repossessed if you do not keep up repayments on your mortgage. 3mc (UK) Ltd is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register https://register.fca.org.uk/s/ under reference 302992. Please note: The FCA do not regulate Business Buy to Let Mortgages.
