Remortgage Guide: How to Remortgage

Everything You Need to Know About the Remortgage Process UK

remortgage guide

How Remortgaging Works

how remortgaging works

Are you looking to change your existing mortgage? Get the remortgaging process right and you could be saving hundreds of pounds each month. 

This remortgage guide covers everything you need to know about the remortgaging process, including what remortgaging is, why you should remortgage, when and how. It is full of endless remortgage tips to make this daunting process run as smoothly as possible. 

You should read this guide to remortgaging if you already have a mortgage on your home but want to change for any number of reasons.

Maybe you’re coming to the end of your current mortgage, or your deal no longer suits you, or you want to cut costs, or consolidate debts? Whatever your reason for wanting to know how to remortgage, this remortgage guide has you covered! 

So, without further ado, here are all our top remortgage tips!

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Why Should I Remortgage?

why remortgage

Let’s start with the obvious – why should you remortgage? 

There are plenty of reasons why remortgaging might make sense for you, but the main reason is a simple one – saving money

The most common reason people decide to remortgage is when they have come to the end of their fixed-rate mortgage term and want to avoid their lender’s expensive standard variable rate. If you have more equity in your home, you can usually switch to a lower interest rate that allows you to save money. 

However, while remortgaging can save you big money, sometimes it does so at a price. Given that mortgage interest rates have dropped, some lenders have significantly increased their fees. You may also have to pay an exit fee to leave your current lender and, depending on your deal, an early repayment charge too. 

This definitely doesn’t mean you shouldn’t remortgage though. It is likely that the savings you make through the remortgaging process will outweigh the other charges you might be required to pay. 

In addition to saving money, there a number of other reasons you might want to start the remortgaging process, including: 

  • Moving to a better deal with a lower interest rate 
  • Moving to a different type of mortgage 
  • You own more of your home and can therefore get a better rate 
  • To release cash from your property e.g. to carry out home improvements and increase your property’s value

How to Remortgage

process of buying a house

So, now you know why remortgaging can be so beneficial, let’s find out how remortgaging works. 

When you remortgage, you either switch to a new lender or to a new deal with your existing lender. 

The first step in the remortgage process is asking a mortgage lender for an Agreement in Principle (AIP). Before choosing to move to a new lender, it is always a good idea to get a quote from your existing one, as they will likely want to avoid losing you. In this case, you might be able to get a better deal and not have to go through the hassle of changing lenders. 

Although an Agreement in Principle isn’t a guarantee, it can give you a good idea of how likely you are to be offered the money you need: 

  • Getting an AIP means the lender can soft search your credit history without giving you a full credit check
  • Once you receive an AIP, you can start the remortgage application process 
  • You will need details of your current mortgage as well as your personal and financial information to give to your new lender

If you decide you want to take out a remortgaging deal with a new lender, the remortgage process is much like buying your first home. You will need to: 

  • Go through the mortgage application process 
  • Provide evidence of your income and outgoings 
  • Pay various fees e.g. arrangement fees 
  • Provide evidence of your purpose for borrowing more money

When the bank or building society has all the information they need, they will carry out a full credit check and arrange a property valuation. Like when you’re purchasing your first house, a solicitor or conveyancer will need to handle the transfer of your mortgage.

How Much Deposit Do You Need to Remortgage?

remortgage guide

You might be happy to hear that you don’t need a deposit for a remortgage. This is because you can use the equity you have in your home instead. 

However, if you really want to, you can use a deposit to add to the equity you already own so that you require a smaller, cheaper mortgage.

How Do I Prepare for a Remortgage?

Choosing to remortgage is a huge commitment and one of the most important things you can do to make the remortgage process a success is be prepared. 

Here are some tips to help you prepare for a remortgage:

  • Check your credit score before the lenders do
  • Don’t apply for credit just before you remortgage 
  • Start the remortgage process early 
  • Estimate your property’s value 
  • Choose your remortgage date carefully to avoid fees
  • Get your paperwork in order 

There are a number of things you can get together before applying to make the remortgaging process go quicker, including: 

  • Your last 3 months’ bank statements
  • Your last 3 months’ pay slips 
  • Proof of any bonuses
  • Your latest P60 tax form
  • ID (usually passport)
  • Proof of address (e.g. utility bills)

When Should I Start the Remortgage Process?

remortgage process

You should start the remortgage process as early as possible. 

The remortgaging process can take anything from a few weeks to a couple of months from when you apply. However, how quickly your remortgage is largely depends on your individual circumstances and how complicated your application is. 

Remortgaging can be a fairly drawn out process, given that it is treated much the same as a new mortgage application. This means that your property will have to be valued and you will have to go through all the relevant checks. 

The remortgage process could take a little longer for those whose jobs have changed since getting their initial mortgage, or who have become self-employed in this time. This is because they may be required to provide more evidence of their income, slowing the process down.

Reasons to Remortgage

remortgage process

Remortgaging to a Lower Interest Rate

As mentioned above, people often choose to remortgage to save money with better interest rates. 

When you initially take out a mortgage for a house, you will normally enter into an introductory deal that lasts between 2 and 5 years (although you can get mortgages with interest rates fixed for up to 40 years). 

Once this introductory period ends, you will automatically be transferred onto the lender’s standard variable rate (SVR). Typically, this SVR mortgage will have higher interest rates compared to your previous deal or a different mortgage elsewhere on the market, even with the same lender. Therefore, remortgaging off the SVR can cut your interest rate – and your annual monthly repayments – substantially.

Remortgaging to Release Equity

Some people choose to remortgage to release equity. This enables you to raise money from the value of your home by increasing the mortgage loan. 

You can then use the cash borrowed to pay for other things, such as home improvements, which can add further value to the property. Recent data reveals that 30% of people who chose to remortgage in 2021 did so to release equity in their property.

Alternatively, you might want to borrow more money against your home to consolidate or pay off your debts. However, you should note that this will increase the size of your mortgage and your monthly payments. So, if you’re thinking of doing this, make sure you meet your lender’s affordability requirements.

Can I Remortgage if I’m Self-Employed?

buying house process

If you’re self-employed you can remortgage, but you may find the process more difficult and more time-consuming than someone who isn’t self-employed. 

This is because the remortgage process for self-employed people requires much more preparatory work. 

Generally, lenders find it harder to assess the finances of those who work for themselves, and so require more detailed evidence that you can afford to remortgage than if you were on a regular payroll. 

You may need to provide three years of financial records, as well as evidence of future work. We would also recommend checking your credit score before applying for a remortgage because a good credit history shows that you have a history of responsible borrowing. 

However, you should bear in mind that different lenders look for different things, so don’t be put off if you get turned down by one mortgage lender.

How to Get the Best Remortgage Deals

buying house process

So, now you know how to remortgage, let’s find out how to get the best remortgage deals. 

Getting the best remortgage deal involves a bit of hard work – but it could be worth it in the long-run. 

When trying to find the best remortgage deal, you should consider the following: 

  • Why do you want to remortgage? Think about your current situation and needs, but also how they may alter in the future 
  • Do the costs add up? Work out how much it will cost to leave your current mortgage and weigh up how much you could save moving to a new remortgage deal
  • Are you in financially good shape? Check all your details are accurate and see if there are any improvements you can make to make you more attractive to lenders 
  • How much could you borrow? You can get an Agreement in Principle from most lenders to see how much money you could be offered
  • How long will it take? Make a note of when your current deal comes to an end and think about remortgaging several months ahead of this date 
  • Shop around. Make sure you compare mortgage deals from multiple different lenders to get the best deal

What is the Cost of Remortgaging?

firs time buyer schemes

While remortgaging may seem like a good idea for several reasons, you should consider that there will be costs. Take into account the fees you might have to pay to arrange a new mortgage deal and factor these into your calculations. 

Some of the costs that might be involved in the remortgage process, include: 

  • A product fee
  • A valuation fee 
  • Legal fees 
  • Exit fees 
  • Early-repayment fees

It might be worth remortgaging despite these costs. It is essential that you weigh up the savings you’d gain from lower interest rates versus paying a fee to leave your current mortgage. 

For example, if you only have a small amount left to pay on your existing mortgage, the savings you’ll make by switching might mean it’s not worthwhile.

So, do you think remortgaging might be a good option for you? 

If your current mortgage is coming to an end or you think you can get a better deal elsewhere, then remortgaging might help you save a lot of money. 

However, you should bear in mind the remortgage process doesn’t come without its costs. 

In this remortgage guide, we have outlined everything there is to know about the remortgaging process. Hopefully, all our remortgage tips will help you understand this important decision better. 


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