Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
Find out all the stages of remortgaging and how a mortgage broker can make the process easier and cheaper.
Before your current mortgage deal runs out, it makes sense to arrange a remortgage and avoid being switched to a more expensive standard variable rate (SVR).
What is a Remortage?
A remortgage is the process of switching your current mortgage to a new deal, either with a different lender or by moving to a new product with your existing lender, without moving home. It is a strategic move, usually undertaken to secure better interest rates, change mortgage terms, or unlock equity.
Why Remortgage? (Common Reasons)
- To Save Money: When your current fixed-rate deal ends, you are usually moved onto a higher Standard Variable Rate (SVR). A new deal can lock in a lower rate and significantly reduce monthly payments.
- To Release Equity: If your home’s value has increased, you can borrow more to fund home improvements, pay off debts (debt consolidation), or other large expenses.
- To Change Terms/Flexibility: You may want to switch from an interest-only to a repayment mortgage, change the term length, or find a deal with better overpayment options.
- To Avoid Rate Hikes: If interest rates are expected to rise, switching to a new, longer-term fixed rate can provide security.
Alternatives to Remortgaging
- Product Transfer: Staying with your current lender but switching to a new deal. This is usually faster, has lower fees, and requires less paperwork.
- Second Charge Mortgage (Homeowner Loan): A separate loan secured against your home’s equity. This is useful if you want to raise funds but don’t want to break your existing low-rate mortgage.
- Unsecured Personal Loan: For smaller amounts (e.g., under £25,000–£50,000), a personal loan might be faster and avoids securing debt against your home.
- Overpayment/Recasting: If you have extra cash but don’t want to change products, you can make overpayments to reduce the principal, then ask your lender to “recast” the mortgage to lower monthly payments.
- Downsizing: Selling your home and moving to a cheaper one to pay off the mortgage entirely.
A general step-by-step process of Remortgaging:
1. Your current lender writes to you
If you’re on an introductory deal such as a two or five-year fixed rate, your lender will contact you well in advance of the expiry date, so you’ll know when you’re due to revert to the SVR.
Assuming the SVR is higher than your current rate of interest (which tends to be the case, though exceptions do occur), this is the time to investigate whether you can save money by remortgaging.
Alternatively, you can find out when you’ll revert to your SVR on your latest mortgage statement. You can sometimes arrange your remortgage up to six months before your current deal runs out.
2. Ask your lender for a closing balance
Your lender will provide you with a redemption statement on request.
This tells you the amount needed to pay off the remaining mortgage loan (including ). This is the amount you’d need to borrow if you choose to remortgage.
Again, make sure you have this information in good time.
3. Find a mortgage broker
The easiest way to be sure of the right deal when you remortgage is to go through a mortgage broker.
An impartial mortgage adviser or broker can search a wide range of products from High Street Lenders and specialist products not available direct, to help find the right deal for your circumstances, and usually has access to deals not available on the open market.
4. Decide which type of mortgage you want
First, decide whether to go for a repayment or an interest-only mortgage.
Interest-only mortgages have lower monthly repayments, but you’ll need a way of repaying the loan at the end of the mortgage term.
You’ll also need to consider whether you want a fixed or a variable rate mortgage and whether you want a shorter two-year deal or a longer one, lasting five years or longer.
There’s a lot to think about, but once again, a mortgage broker can help with the decision and help you find the right remortgage deal.
5. Instruct a solicitor (if moving to a new lender)
If you’re changing lenders, you’ll need to appoint a solicitor or conveyancer.
They will sort out any paperwork needed in the process e.g. drawing up and signing the mortgage deed and transferring the title of the property.
6. Eligibility and affordability checks – get your documents ready will help speed up the remortgage process.
The broker or bank will want to see some or all of the following:
Three months’ bank statements, payslips or both (, your last three years’ accounts)
Utility bills
Credit card statements
Address details (for the last three years)
ID such as a driving license or passport
Records of regular outgoings, such as subscriptions
Proof of any bonuses or commission
Your P60
7. Lender issues a mortgage in principle
Once they are happy with your documents, the mortgage provider will give you a Mortgage In Principle (MIP), a written indication of how much they might be prepared to lend.
This isn’t a mortgage offer, and it’s not binding, but it’s a useful indicator of what you may be able to borrow.
Also, if you’re remortgaging to buy a new home, estate agents take these seriously. A MIP lasts between 60 and 90 days, depending on the lender.
8. Valuation
The lender will arrange a valuation, which the customer generally pays for, although sometimes it is included free of charge.
This simply confirms the house is worth the amount you’re asking to borrow.
It does not replace a survey to check the building’s condition, and in fact, is sometimes done online.
9. Mortgage application time
If you already have a MIP and are applying for your mortgage with the same lender, you’ve done part of the legwork already.
If you haven’t, the mortgage broker or lender will ask you about your job and the industry you work in, your income, spending, credit history, deposit size and any other financial commitments.
The more evidence you can provide of regular repayments, the more likely you are to have your application approved.
10. Receive mortgage offer
If the lender approves your mortgage application, they will send you and your solicitor a mortgage offer letter.
The offer usually lasts six months and outlines the amount you can borrow based on the credit checks, income verification and property valuation, together with any conditions.
Check the offer thoroughly to ensure the details are correct. Let the lender know if anything is wrong or if your circumstances have changed in the meantime.
11. Solicitor draws down mortgage funds and pays off old mortgage
When you are ready to go ahead, your solicitor requests the money from the new lender and uses it to pay off your old mortgage.
12. New mortgage registered at the Land Registry
Your solicitor registers the mortgage holder’s details with the Land Registry. If applicable, the title deeds are transferred to the new lender.
Key Takeaways
- Remortgaging before your deal ends prevents switching to a costly standard variable rate (SVR).
A mortgage broker can help find the right remortgage deal and access exclusive offers.
Lenders require affordability checks, bank statements, and property valuation before approving a mortgage.
If switching lenders, a solicitor handles paperwork, mortgage transfer, and Land Registry registration.
