Complete Remortgaging Guide

What is Remortgaging?

Remortgaging involves switching your existing mortgage to a new deal, either with your current lender (product transfer) or moving to a different lender. It's one of the most effective ways to reduce your monthly payments, access better terms, or release equity from your property.

When to Consider Remortgaging

End of Initial Deal Period

The most common time to remortgage is when your initial fixed, tracker, or discount rate period ends and you revert to your lender's Standard Variable Rate (SVR).

Key Remortgaging Triggers

Types of Remortgaging

Product Transfer (Same Lender)

Pros: Quick process, no legal fees, no valuation required, no affordability reassessment

Cons: Limited to current lender's rates, may not be most competitive, fewer product options

Full Remortgage (New Lender)

Pros: Access to whole market rates, potentially significant savings, better terms and features

Cons: Legal fees, valuation costs, full application process, 6-12 week timeline

Calculating Potential Savings

Factors Affecting Savings

• Current vs. New Rate: Larger rate differential = greater savings
• Outstanding Balance: Higher balances amplify savings
• Remaining Term: Longer terms spread costs over more payments
• Remortgage Costs: Legal fees, valuation, arrangement fees
• Early Repayment Charges: Cost of leaving current deal early

Break-Even Analysis

Calculate how long it takes for savings to exceed remortgaging costs:

Break-even period = Total costs ÷ Monthly savings

If break-even is under 18-24 months, remortgaging usually makes financial sense.

The Remortgaging Process

Improving Your Remortgage Prospects

Credit Score Enhancement

• Check credit reports 3-6 months before application
• Pay all bills on time leading up to application
• Reduce credit card balances to below 30% of limits
• Avoid new credit applications before remortgaging

Income Optimization

• Ensure payslips reflect any recent salary increases
• Document regular overtime or bonus payments
• Maintain employment stability for 6+ months
• Prepare self-employed accounts well in advance

Property Value Maximization

• Complete minor improvements before valuation
• Ensure property is well-presented for surveyor
• Provide evidence of local sales if beneficial
• Consider formal valuation if major improvements made

Common Remortgaging Challenges

Affordability Issues

Since 2014's affordability rules, remortgaging can be more challenging:

• Reduced income: Job changes, reduced hours, or career breaks
• Increased expenses: New dependents, debt, or higher living costs
• Interest rate stress testing: Must afford payments at higher rates
• Age limits: Approaching maximum age limits for some lenders

Property Issues

• Negative equity: Property worth less than outstanding mortgage
• Down valuations: Lower than expected property valuations
• Lease problems: Short leases or ground rent issues on flats
• Property defects: Structural issues identified during survey

Market Conditions

• Rising rates: Market rates higher than current deal
• Lender appetite: Reduced lending in certain areas or property types
• Economic uncertainty: Stricter lending criteria during downturns
• Brexit/political factors: Market volatility affecting availability

Costs of Remortgaging

Unavoidable Costs

Potential Additional Costs

• Early Repayment Charges: 1-5% of outstanding balance if switching mid-term
• Broker Fees: £500-£1,500 if using mortgage broker
• Higher Lending Charges: For high LTV remortgages
• Buildings Insurance: May need to change insurer

Special Remortgage Situations

Negative Equity

If your property is worth less than your outstanding mortgage:

• Limited lender options available
• Consider staying with current lender for product transfer
• Wait for property values to recover if possible
• Make overpayments to reduce balance below property value

Self-Employed Remortgaging

• Prepare 2-3 years' accounts or SA302 forms
• Use specialist self-employed lenders if needed
• Consider timing around strong financial years
• Document any contract renewals or pipeline work

Buy-to-Let Remortgaging

• Different affordability criteria based on rental income
• Typically require 125-145% rental cover
• Higher interest rates than residential mortgages
• Additional tax considerations for landlords

Later Life Remortgaging

• Some lenders have maximum age limits (70-85)
• Consider retirement income implications
• Explore lifetime mortgages as alternative
• Seek specialist later life lending advice

Expert Remortgaging Tips

Timing Your Application

• Start research 6 months before current deal expires
• Submit applications 3-4 months before expiry
• Allow extra time during busy periods (spring/summer)
• Consider rate rise environment when choosing deal length

Negotiating Strategies

• Use competitive offers to negotiate with current lender
• Consider product transfers if rates are competitive
• Factor in all costs, not just headline rates
• Negotiate on arrangement fees and other charges

Long-term Planning

• Consider overpayment facilities for future flexibility
• Think about changing circumstances (retirement, children)
• Balance rate security with potential for future savings
• Maintain good credit throughout mortgage term