A guide to Remortgaging (+3 key tips)

In this brief guide, we are going to answer the question “When can I remortgage”

Mortgages are the biggest debt most of us will take on in our lifetime. So it makes perfect sense for us to be constantly on the lookout for ways to reduce the amount of interest we have to pay on our mortages.

This leaves many of us thinking “when can I remortgage?”, when is the most suitable time to remortgage?

There are several ways to know when we can remortgage but most of those ways require action. They require you to be constantly aware of your mortgage. 

You can do this or you can use a mortgage management service.

By plugging your current mortgage into a mortgage management service you will eradicate the fear of missing out and the mortgage management service which will compare all the variables concerning your mortgage.

It will then let you know when to switch to a cheaper deal which could save you thousands of pounds per year in mortgage interest.

When can I remortgage?

You can remortgage at any time you want but usually, people who chose to remortgage are triggered by a desire to save money, borrow money or have more flexibility with their mortgage.

There are a few times when remortgaging is a bad idea But let’s take a look at the few times when you can remortgage:

• if you want to overpay your mortgage
• if your house value has risen
• if your fixed-rate introductory phase just finished
• if you want a flexible mortgage
• if you are on a variable rate
• if you want to release the equity in your home
• if a new mortgage costs less

You can remortgage if you want to overpay your mortgage:🏠

You can remortgage if you want to overpay and your current mortgage lender is not letting you or they have early repayment charges which will make overpaying your current mortgage not cost-efficient.

You can remortgage to a better mortgage rate and using the overpayment as an additional deposit to buy more equity in your property and reduce your mortgage debt.

A double win!

By adding an additional mortgage deposit you will essentially reduce your loan size and may be eligible for a much cheaper mortgage rate as your LTV will fall.

You can remortgage if your house value has risen:🌈

You can remortgage if your house value has risen.

This is always a good time to remortgage as you essentially have a reduced your loan to value due to the equity you own in your house increasing. 

This means if you chose to remortgage at this point you will have a lower loan to value and will fall into a cheaper LTV bracket and hence be eligible for cheaper mortgage rates. 

Be careful not to rush things as your new mortgage Lender must agree with this new rise in value when they carry out their own mortgage valuation for any of this to go through smoothly.

You can remortgage if your fixed-rate introductory phase just finished:❄

You can remortgage when your fixed-rate mortgage or any introductory mortgage rate which you are on is about to come to an end.

Remortgaging when your introductory rate is about to end is a very good time to remortgage as without this you could potentially be walking straight into a high SVR due to your introductory period ending. 

It is worth checking if there are cheaper rates than you are currently on and if the exit fees and early repayment charges of your current mortgage, as well as the mortgage fees associated with the new mortgage, will still make remortgaging a worthwhile option. 

A mortgage management and switching service should handle this for you. 

They will indicate if switching is worth it and with which mortgage lender and product.

You can remortgage if you want a flexible mortgage:💪🏻

You can also remortgage if you want a flexible mortgage product.

Flexible mortgages might allow you to miss payments, combine your savings account as an offset mortgage or even bring in a guarantor which may allow you to borrow more. 

Flexibility might, however, come at a cost(increased mortgage rate) so be mindful of this.

You can remortgage if you are on a variable rate:🤑

If you are on a variable rate then you can remortgage to a fixed rate for more certainty.

Variable-rate mortgages move along with the interest rate set by the bank of England. 

If you are worried that interest rates are going to rise or there has been some indication by the bank of England that the interest rate is going to rise then moving to a fixed deal might be a good idea.

Interest rates may be rising because the economy is about to go into a recession or maybe the property market has seen a lot of house prices fall and the mortgage lenders are reacting by tightening lending funds.

 Be sure to check with your current mortgage Lender first as this might be the cheapest option.

You can remortgage if you want to release the equity in your home:

You can remortgage if you want to release the equity in your home and this is a very common reason to remortgage in the UK.

You can use the released equity for anything but it is common for things such as home improvements, going on holiday or buying a new car. 

If you are remortgaging to get a further advance (when you borrow more from the mortgage lender) then the mortgage lender may ask to see evidence on what the money is being used for and may reject your request if they don’t feel comfortable.

In this case you can always remortgage to a new lender.

You should always consider the fees the new lender will charge you for a new mortgage and any costs for leaving your current mortgage.

You can remortgage if a new mortgage costs less

If the mortgage rates you are currently on are not as competitive as the mortgage rates on the mortgage market then it may be a good time to remortgage and benefit from any potential savings.

Remortgaging should always be planned weeks, if not months in advance. As it involves the same steps you took when planning a mortgage. 

Your credit score is critical and you must check this to ensure it is good enough. If it isn’t then taking steps to rectify it will be your next point of call.

5 times you shouldn’t remortgage🌡

Remortgaging isn’t always a great idea.

Here are a few times when it’s best to put your time to better use:

Your Mortgage affordability has changed:🚩

This is when your credit score has gone down or your net income per month has fallen. 

It is always worth checking your credit file and trying to increase your credit score before applying for a remortgage.

Your mortgage affordability could have changed due to a few things such as new commitments e.g family, cars or maybe it’s that annual trip to Marbella. 

Whatever the case, a mortgage lender may no longer see you worthy of a new mortgage.

It might not be your situation has changed but rather the Lenders criteria have changed due to new regulation or economic factors.

You can remortgage with a reduced mortgage affordability but you can expect to get less competitive mortgage rates which may even be higher than your current mortgage.

You have negative equity:🎈

Seeking a remortgage with negative equity isn’t really going to get you places.

Negative equity is when you owe more on your mortgage than the property is worth

Negative can occur due to your house price dropping below the current value of your home.

Unfortunately, in this case, your only option usually to ride out the storm until your property price rises.

You can remortgage with negative equity if there are competitive mortgage rates on the market which you may be eligible for.

Little equity:🚩

If you don’t have enough equity in your current home then it might not be worth remortgaging as the LTV will not move significantly since you got your mortgage.

 In any case, it is worth plugging your mortgage details into a Mortgage management and switching service that constantly monitors your mortgage and your current affordability to let you know if switching to a cheaper deal is worth the hassle.

You can remortgage with little equity if you have competitive mortgage rates which you may be eligible for.

Your exit fees and early repayment charge is high:⛔

This can be the case if you are on a fixed-rate mortgage or have a mortgage with an introductory offer. 

The early repayment charges on these types of mortgage are usually high.

In this case, there is little you can do but wait out the time frame where the early repayment charges apply.

It is worth comparing the cost of remortgaging to the savings made to see if you have net savings when considering all early repayment fees and the new mortgage fess.

In this case, it totally depends on just how much the net savings are and if it’s worth your time. 

If you are unable to find any external mortgages that offer you great net savings then you could potentially remortgage with your current mortgage lender for a new mortgage with a cheaper mortgage rate.

Just try not to get locked in for too long again, in case a better deal is around the corner from a different provider.

Your mortgage debt is too low: 💧

Believe it or not mortgage lenders have a baseline which they will not lend beneath. 

In the case, your best bet may be to get a personal loan ata cheaper mortgage rate and pay off your current mortgage.

You are already on an excellent rate:

Well, this really speaks for itself. If you are already on the best mortgage rate possible then you can only wait for rates to go down. 

In any case, it is worth plugging your mortgage to a mortgage management and switching service to monitor and notify you to switch your mortgage deal when a cheaper one becomes available.

The cost of remortgaging: 😮

As important as remortgaging is, One must always be conscious of the fees involved with remortgaging.

We break down the remortgage fees into two bits:

• Costs of leaving your current mortgage
• Costs of getting a new Mortgage

What are the costs of leaving your current Mortgage:

Exit fees: ✈

These are the fees you pay to the Lender on clearing the debt of a current mortgage in full before the initial term. 

It is also known as a “deeds release fee”.

It is, in essence, an admin charge and some lenders do collect this payment at the beginning of your mortgage. 

If you are charged an exit fee when paying off a current mortgage then it is worth checking that you haven’t already paid it in the beginning.

You should also refer to your key facts illustration which will have more specific information on how much you will be paying and other relevant information regarding the exit fee.

In summary:

How much? 1%-5% of your outstanding mortgage

When do I pay? If you exit your current tie-in deal early

Who do I pay? Your existing lender

Will I always have to pay this fee? No

Do I need to pay upfront or can I add it to my mortgage? Either

Early repayment charge:🔔

Early repayment charges are as they imply, charges for paying early. 

These charges usually reflect when a borrower(you) have overpaid more than your agreed monthly amount. 

This is, of course, the case when you end your mortgage agreement as you essentially settle the debt in full by overpaying the outstanding debt in a shorter time frame than agreed thereby denying the current lender of interest earnings. 

This charge is usually implemented when introductory offer deals are given to borrowers and can be especially high if you are still in the introductory offer phase of your mortgage. It is also prominent for fixed-rate mortgages.

The early repayment charge can either be paid by funds you have or by adding it to the mortgage you are getting from your new lender.

To avoid paying the early repayment charge you can usually simply wait until the term which the early repayment charge covers has passed and then remortgage.

Just be aware that increasing the mortgage size to cover the cost of the early repayment charge will increase your loan-to-value ratio, which could push you into a more expensive LTV band.

In summary:

How much? 1%-5% of your outstanding mortgage

When do I pay? If you exit your current tie-in deal early

Who do I pay? Your existing lender

Will I always have to pay this fee? No

Do I need to pay upfront or can I add it to my mortgage? Either

Costs of getting a new mortgage:☘

Arrangement or product fee:✔

This is usually added to the mortgage rate for illustration purposes and spread over the term of the loan so as to reflect the true cost of the mortgage and make it easy to compare. The mortgage APRC will contain this fee.

Lenders will usually give you the option to pay this fee upfront or add it to the mortgage.

 Be aware that adding it to the mortgage will incur interest charges on that fee for the lifetime of the mortgage.

But a swift way to outsmart the lender on this occasion is to overpay on your monthly mortgage payment in your first few months as lenders typically allow you to overpay 10% of the outstanding debt per year.

By doing this you could pay back the arrangement fee with very little interest charges.

In summary:

How much? £0-£3,500

When do I pay? Either on mortgage application or add it to the loan

Who do I pay? Your Lender

Will I always have to pay this fee? No

Do I need to pay upfront or can I add it to my mortgage? Either

Mortgage Valuation fee:✔

The mortgage valuation fee is sometimes covered by your new lender or if it isn’t you can pay between £200-£500.

Lenders always carry out a valuation on the property but in a remortgage, it could be less strict and therefore cheaper.

A mortgage valuation fee is charged when this is done.

In summary:

How much? On average £200-£500

When do I pay? When you apply (often together with the mortgage booking fee and mortgage arrangement fee)

Who do I pay?  The new lender

Will I always have to pay this fee? No, most lenders will pay it for you.

Do I need to pay upfront or can I add it to my mortgage? Pay upfront

Booking Fee:✔

Some lenders may charge a mortgage booking fee to secure a fixed-rate, tracker or discount deal – it’s sometimes also called a non-refundable application fee or a reservation fee. 

It usually ranges around £200-£400.

In summary:

How much? £100-£200

When do I pay? On mortgage application

Who do I pay? Your new lender

Will I always have to pay this fee? No, not all lenders charge them

Do I need to pay upfront or can I add it to my mortgage? Pay upfront

Solicitor Fee:

To transfer deeds and change the name on a property, legal work is required. 

Your solicitor will also carry searches out on the property to ensure everything is fine. 

Most remortgaging deals will usually offer a free solicitor package so you may not have to pay for this.

In summary:

How much? Usually around £300

When do I pay? Could be anytime during the remortgage

Who do I pay? Your solicitor

Will I always have to pay this fee? No. Usually, your new lender will pay

Do I need to pay upfront or can I add it to my mortgage? Pay upfront

What to do before you secure a remortgage?

Before you secure a mortgage there are two main things you should do.

Check your credit score

If you are unsure of what your credit score is then you should check your credit score from the four credit bureaus in the UK: Experian, Crediva, Equifax and Transunion.

Some of these credit bureaus may charge you a fee to view your credit report so what you can alternatively do is request a statutory credit report which is a free credit report which each credit bureau must provide to you upon you requesting it.

Alternatively, you can also use credit score services such as Checkmyfile and clearscore to check your credit report.

Once you have seen your credit score you will know if you can remortgage or if you need to spend some time building your credit.

Secure a remortgage deal in advance

You don’t have to wait till your existing mortgage deal has come to an end. In fact you can start planning your remortgage in advance and can even secure a remortgage deal up to 6 months in advance.

Most mortgage offers are valid for between 3 and 6 months from when they are used and this means if you have between 3 and 6 months left on the existing mortgage deal you can secure a mortgage in advance and switch once your deal ends.

You simply have to notify the new mortgage lender of when you want the mortgage to start and why.

By getting your remortgage deal sorted in advance you won’t have to ever move to your current mortgage lenders standard variable rate and this could potentially save you thousands of pounds

Securing your remortgage deal in advance will also mean that if mortgage rates rise suddenly after you will have already secured a goof mortgage rate for your remortgage.

Not all mortgage lenders will allow you to secure a mortgage rate in advance so you must inquire about this with the lender before securing a mortgage rate for your remortgage.

Some mortgage lenders will only offer a 3-month validity period from the time the mortgage offer was given whilst other mortgage lenders start the count from when the mortgage application was made.

Mortgage lenders may also have different offer periods depending on if you are getting a remortgage or buying a property.

Although securing your mortgage deal in advance is a good thing to do, you should not start looking too far in advance as this may limit the number of mortgage lenders available to you.

Starting the search from the 6-month mark is likely the best solution.

FAQs: When can I remortgage

How far in advance can you remortgage?

You can start the remortgage process as far back as 6 months but you can remortgage at any time although most people may prefer to remortgage immediately their introductory mortgage deal ends.

Can you remortgage at any time?

Yes, you can remortgage at any time but there will be no point in doing this.

You should instead look to remortgage when there is some purpose behind your remortgage. E.g when mortgage rates are about to rise or when the equity in your property has increased significantly.

Can you remortgage to pay off debt?

Yes, you can remortgage to pay off debt by consolidating your debt into your new mortgage.

Not every mortgage lender will allow you to remortgage to pay off debt so be mindful about this when looking for a new mortgage lender.

You can remortgage and release the equity you have built up in your property which you can then use this to pay off debt.

Use a remortgage calculator

You can use a remortgage calculator to see what the monthly costs could potentially be when you remortgage.

Use a mortgage broker for your mortgage in principle

You may want to use an independent mortgage broker to help you get a remortgage on your home.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.

This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.

It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.

This will then bring an end to the conveyancing process, at which point you will have a new mortgage.

In this brief guide, we answered the question “When can I remortgage”.

If you have any questions or comments please let us know.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.