Your mortgage is a big commitment – but you don’t need to stay with the same provider, or on the same type of deal, forever. These days, it’s easier and quicker than ever before to find a better remortgaging agreement, regardless of your personal circumstances or the reason behind your decision to refinance your home.
Whether you’re looking for a specific UK remortgage, or you simply need help exploring your options, you can trust the expert brokers here at CLS Money to source a solution for you and your family that will tick all the boxes financially.
Read on for an overview of what it means to remortgage your home, how doing so can help you achieve your lifestyle goals, and a handy list of the things you’ll need to consider when finding the perfect deal.
If you’d rather discuss the remortgaging process with one of our brokers instead, contact us today. Our remortgaging advisors have access to the whole of the UK market, which means they can source deals from more niche providers, as well as the High Street banks and household names that are often the first port of call for homeowners with healthy credit scores and a large amount of equity in their property.
We offer free initial appointments to remortgage clients, and we’ll even provide consultations out of hours, so you can pick a time that fits in with your busy schedule.
First thing’s first – what is a remortgage?
When you remortgage, you take out a new loan on a property you already own. You do this to either replace your existing mortgage product to get cheaper interest rates, or to release some cash from your home to meet your current financial needs or fund a lifestyle decision.
Decades ago, it wasn’t unusual for homeowners to stay with the same provider throughout the course of their entire mortgage. Nowadays, however, remortgaging for better terms or to access some equity is commonplace. It’s a bit like searching around for the best energy rates or the more affordable broadband contracts, although the financial consequences are much greater if you choose the wrong mortgage – and this is why it’s so important to seek professional advice before making the switch.
Reasons to remortgage:
In general terms, you can choose to remortgage to save money, raise money or release equity.
Switching to a better mortgage deal
Times change, and so do mortgage rates! This is why many homeowners decide to move to a different mortgage provider at the end of their fixed rate agreement.
It’s well worth shopping around. Depending on the market, you may be able to save hundreds, if not thousands, of pounds in interest in the next few years. For example, at the time of writing, interest rates have dropped to a record-busting 0.1% - so now is an excellent time to consider remortgaging to keep repayments as low as possible.
However, you don’t always need to move to a different lender to get a great deal. It’s important to check whether your existing provider can offer similar, if not better, terms when compared to a quote from elsewhere. The grass is not always greener, especially if your current bank or building society offer a fee-free option. (We’ll go into more detail about how much your remortgage will cost a bit later on.)
Changing to a different type of deal
It makes sense to take advantage of more affordable rates – but this is not the only reason you might want to remortgage.
You may want to switch from an interest only mortgage to a repayment arrangement to start building more equity in your property. Or, you might wish to find a deal that allows you to make overpayments so you can clear your balance faster and work towards your dream of being totally debt free.
Remortgaging for debt consolidation
Remortgaging can be a great way to raise capital that can be used to pay off debts elsewhere. Taking out a remortgage could leave you with a lump sum of money that you can then use to clear everything you owe and get yourself back on even keel. This is a particularly attractive option for homeowners whose circumstances have changed unexpectedly and who need access to extra funds, but don’t want to pay the significantly higher interest rates offered by credit card companies and other loan providers. This is because loans secured against a property are almost always cheaper than those arranged elsewhere.
(Remortgaging to clear or consolidate debts is only advisable as a short-term solution, though. There are many other debt consolidation options available. If you feel like your finances are spiralling out of control, you may benefit from speaking to one of our qualified financial advisor.)
To qualify for this kind of remortgage, you will need to prove you will be able to afford your new loan. You will also need to make sure you have enough equity in your property. At the moment, the maximum loan to value (LTV) that lenders are willing to consider is 90%. However, the amount a mortgage company will be prepared to lend will depend on their own assessment criteria; you will never be guaranteed to receive the same offer from two different providers.
Want more information on debt consolidation mortgages? Speak to the team at CLS Money, who will happily investigate your circumstances and suggest the best way forward based on your outgoings and your longer-term lifestyle goals.
Remortgaging for home improvements
Another popular reason to remortgage is to raise capital to spend on an extension, a conversion project, or other more significant improvements or repairs to your property.
Again, the amount of money you will be able to access will depend on how much equity you’ve built up in your home, along with how much you can afford to repay towards the new mortgage on a monthly basis.
Most people remortgage before carrying out the works, but in some cases, it may make sense to wait until the project has been completed. For example, if your changes have increased the value of your property and therefore lowered your loan to value (LTV), you will in theory have access to more equity based on this new valuation. You may also be able to access a broader range of products, and therefore more competitive rates. However, there is always an element of risk involved in this strategy, as it doesn’t account for market fluctuations that are out of your control – so be sure to weigh up all your options before making a decision. Contacting one of our mortgage advisors could help you with your decision.
There are other ways to borrow larger sums of cash for home improvement projects. If you don’t want to go down the remortgaging route, you could take out a personal secured loan, which will be backed by your property but separate to your actual mortgage. You could also arrange an unsecured loan, but this may be a more expensive option in terms of interest rates. All these routes have their own pros and cons, which is why it’s always best to speak with an experienced advisor before taking any of these actions, you will need to work out exactly how much your home improvements are going to cost and evaluate whether the benefits of these renovations outweigh the initial expenditure. Don’t forget to factor in architects’ fees, builders’ fees, materials, and the costs involved in obtaining suitable planning permission and arranging building regulation inspections.
Remortgaging to release equity
Perhaps you want to free up some cash for reasons that haven’t yet been discussed here. Maybe you want to gift a lump sum to a family member, put some money towards your child’s wedding, or arrange that once-in-a-lifetime trip you’ve always dreamed about.
You may wish to release capital for a new business venture, or to simply boost your disposable income and enjoy a higher standard of living.
In theory, you can release equity for any purpose. But the challenge lies in convincing your lender that you will be able to afford your new loan repayments in the longer term, and that your decision poses an acceptably low amount of risk of defaulting on these payments.
For context, you may need to approach a more specialist lender if you wish to use released funds to pay an outstanding tax bill or settle school fees. But it’s certainly not impossible to arrange this kind of equity release remortgage. The team here at CLS Money will be able to connect you with a mortgage provider that is willing to be more flexible in their lending criteria than other mainstream banks, contact us today to see if we can help.
Remortgaging to buy another property
If you’re looking to buy a second home for either yourself or for the benefit of a friend or a family member, you could remortgage to free up the funds for your new purchase.
If you have enough equity in your existing property to make the arrangement viable – either through repayments or due to a rise in the value of your home – you could release this capital and put it towards the deposit for your next property (and all associated purchasing costs, such as stamp duty and mortgage fees).
You can also remortgage to finance the purchase of a Buy to Let (BTL) property to achieve a better return on your money at a cheaper borrowing rate. However, if you want to retain your existing property as a buy to let investment and in turn consider your new property to be your primary residence, you will need to look into a let to buy arrangement.
If you are considering remortgaging your home to buy another residential or Buy to Let investment, contact one of our advisors first. He or she will be able to source a great remortgaging deal for your existing property, along with a favourable rate for your BTL loan.
The different types of remortgages available
We’ve discussed why you might want to consider a remortgage – but what types of products are available to you, and which of them are best suited to your requirements?
Here’s a bit more information on some of the more popular mortgage products in the UK.
As the name suggests, a fixed rate mortgage will be set at a certain level of interest for the length of the term. It will protect you, the borrower, from escalating interest rates – it will prevent you from benefitting from lower rates if the market takes a downward turn.
If you do not successfully remortgage before the end of your fixed rate term, you will be placed on your lender’s standard variable rate (SVR), which can be significantly higher than you’ve been used to. It is advised to contact one of our advisors 3 months prior to your fixed rate ending, this way we can get the ball rolling on your remortgage, to minimise the time you spend on the SVR.
Choose a capped rate deal, and you’ll pay a rate of interest that is directly linked to the lender’s SVR, but that is capped at an agreed maximum level. So, if the SVR goes down, so will your payments – and you’ll never be faced with unexpectedly high interest charges if this rate significantly increases.
This is similar to a capped rate mortgage. It may prevent your interest rate from going sky-high – but it will also stop the rate from going too low. You will often come across mortgage products that stipulate both caps and collars.
Standard variable rate (SVR)
SVR mortgages are charged at the standard variable interest rate that is set at the discretion of the lender. This rate will normally be a couple of percentage points higher than the Bank of England’s base rate, and it will fluctuate depending on the ongoing decisions of the Monetary Policy Committee. They’re not the ideal choice for borrowers who want to know exactly what they’re going to be charged each month, and they’re not often recommended by brokers and financial advisors because they are a more expensive option than fixed or capped rate products.
Discounted rate mortgages are, quite simply, SVR mortgages offered at a cheaper rate for a short introductory period. Sounds good, doesn’t it? But remember, just because the temporary rate is lower than the standard rate, this doesn’t mean it’s the best rate available. Before committing to a discounted rate mortgage, be sure to research or enquire about your other options and make sure that you will still be able to manage your repayments if you were to have to pay the highest SVR.
Tracker remortgages are similar to fixed rate products in that their interest rates are set at a certain level, usually lower than the lender’s SVR. However, if the Bank of England increases or decreases the base rate, the interest rates you pay will change in line with its recommendations; they won’t change in line with the SVR.
If you have a poor credit history and your credit report is littered with missed payments, defaults, CCJs and even more serious incidences, you’ll want to track down a product from a lender that is prepared to take a view on your financial situation. Adverse credit mortgages may come with higher interest rates, but they are a lifeline for borrowers who don’t want to let their past mistakes ruin their future prospects.
You can learn more about adverse credit mortgages by clicking here.
When can I remortgage?
Technically, you can remortgage your home at any time. However, some lenders will require you to pay into your existing mortgage for at least six months before allowing you to switch to a new product or provider. It’s also not prudent to remortgage just for the sake of it, as there are normally costs involved in the process, which we’ll discuss later on.
Fixed rate mortgage agreements normally last 2, 3, 5, or, in some cases, 10 years. When your fixed rate mortgage term finishes, you will be placed onto your provider’s standard variable rate (SVR), which can often produce higher interest rates. To avoid potentially overpaying, you will need to make sure you have applied for, and been accepted into, your new mortgage well before your existing term ends.
This is why we would normally recommend contacting one of our brokers for remortgaging advice approximately 3 months before your agreement is due to expire. This will give us at least 12 weeks to find the right product, contact the lender with your application, and make sure everything is ready in good time.
How the remortgage process works
As with applying for a new mortgage, the first phase of the remortgaging process involves getting an Agreement in Principle. This tells lenders how much you can borrow. At CLS Money, we aim to provide an Agreement in Principle to everyone who enquires with us.
Next, you’ll need to research the whole market to find the right deal. When you have tracked down a product that meets your needs – often with the help of a remortgaging specialist – you will need to consider all the costs involved in switching. You will normally have to pay an application fee, which is sometimes known as an arrangement fee; a valuation fee, which confirms what your property is worth for mortgaging purposes; and a solicitor’s fee to ensure the smooth transfer. At this stage, make sure you ask the lender if there are any costs involved in exiting your new agreement early, or paying off the mortgage balance before the term ends.
Now it’s time to apply for your remortgage! You’ll need to provide documents and in-depth information about your personal and financial circumstances, and you’ll need to dig out the details of your existing mortgage. If you need help, contact our brokers who source all the necessary paperwork and provide a strong case to the lender.
The lender will complete a credit check to make sure you have provided them with an accurate snapshot of your financial position. You’ll be notified at this point if there are any issues on your credit file that could affect your application.
Your property will be valued.
A solicitor or conveyancer will handle the transfer of your mortgage, and as long as there are no unexpected bumps in the road, your new mortgage will come into play as soon as your previous mortgage ends. To avoid time spent on the SVR we recommend you contact us 3 months prior to your current fixed rate ending.
How long does it normally take to remortgage?
It’s impossible to say exactly how long it will take to finalise your new deal, as the transaction will depend on how quickly you can return the required paperwork, and how long it takes for your solicitor to complete the application. However, remortgaging is often much easier than applying for an entirely new mortgage.
Normally, you can expect to complete the entire remortgaging process within 4 weeks.
Do I really need help from a solicitor?
If you decide to remortgage with your current lender by moving to a new rate or deal, you won’t need to hire a solicitor, because there’s no additional legal work involved in a straightforward product transfer. The same applies if you’re looking to get an advance.
In all other instances, you will need to instruct a solicitor or conveyancer to handle the legal side of the transaction on your behalf. He or she will be responsible for:
Confirming you are who you say you are by carrying out ID checks
Obtaining a redemption statement from your existing mortgage provider, along with information on any exit charges or early repayment charges that may be due
Arranging leasehold checks, if you are remortgaging a leasehold property
Arranging property searches
Assessing your valuation
Checking the fine print of your remortgage terms and raising any issues with the new lender
Carrying out final checks, which often involve a bankruptcy search
Completing a priority search at the Land Registry to make sure the property deeds have remained the same since the start of the remortgaging process
Completing the remortgage
Registering the mortgage changes with the Land Registry
Sometimes, your new lender will offer to instruct one of their own solicitors to handle your transfer and pay your legal costs as part of the deal. If they do not offer this service, you will need to cover various fees yourself. Here at CLS Money, we can recommend a solicitor and source a product with a cashback facility to help keep your cost to a minimum.
How much will remortgaging cost?
Many customers who are remortgaging their property for the first time do not realise that the process comes with certain costs.
As well as the conveyancing fee, which can range from £300 to £1,000, be prepared to pay for the Land Registry fee, which could be anywhere between £20 and £900; the searches; and an official copy of the title.
You cannot usually add conveyancing and associated fees to your new mortgage, so set aside some cash to ensure you can clear these balances upfront.
Depending on the terms of your current mortgage, you may be liable for early repayment or early exit fees, too.
The best way to get a complete breakdown on your remortgage cost is by contacting CLS Money and speaking to one of our expert financial advisor free of charge to provide you with the figures you need.
If I own my house outright, can I still remortgage?
Yes. If you own 100% of the equity of your property, you can choose to release some of its value by taking out a mortgage. You may want to do this for one or more of the reasons we mentioned earlier; perhaps you want to put some of the money towards an investment property, for example, or maybe you want to take some cash out of your property to fund your travel plans.
Owning what’s known as an unencumbered property puts you in a great position to compare the best remortgage deals from the entire market, Which means you could still benefit from professional advice, especially if you are looking to apply for a mortgage in later life. Our mortgage brokers are always here to talk you through your options and help you find a mortgage provider that can offer excellent rates on your home loan.
Can I remortgage if I have negative equity?
Being in negative equity due to falling property prices means that the property you own is worth less than the amount that is left on your mortgage.
It’s not normally a huge problem unless you wish to sell your property before the market improves and its value increases again.
If you want to remortgage while still in negative equity, your options may be more limited than if you still held capital – but it’s not always impossible to find a deal, as our remortgaging specialists will testify.
If you suspect your mortgage is in negative equity, the first thing you need to do is arrange for a formal valuation, we have got contacts to arrange this for you. Then, you will need to compare how much your house is worth with your outstanding mortgage balance to determine the extent of the problem. Once you have a better idea of where you stand, contact our brokers, who will be able to introduce you to negative equity mortgage lenders who will be able to offer a new arrangement.
How can I find the best remortgage rates?
There are plenty of online tools that will help you compare rates from both mainstream and specialist lenders. They can be useful if you are looking for a general idea of the products that might be available to you – but until you contact the lender directly for more information or a quote, you won’t know if you meet their eligibility criteria. It can be easy to be swayed by an unbelievably low interest rate but bear in mind that this is not the only indicator that a product is going to be good fit for you in the longer term. You need to consider remortgaging fees, exit fees, early repayment terms and lender incentives to gain a more accurate picture of what the remortgage deal can offer you.
Also, you may be surprised to learn that some of the best remortgaging deals aren’t advertised directly to customers via these comparison platforms. Some terms are only available to homeowners who are seeking a remortgage through a broker.
To truly access the best remortgaging rates, we would always recommend speaking with one of our experienced mortgage brokers, who will be able to scour the entire market on your behalf and potentially find an exclusive deal with much more favourable terms than you were expecting.
Your remortgaging checklist
For some, remortgaging is straightforward. For others, it’s a process that involves making many decisions that could significantly affect their financial future. But regardless of your circumstances, here’s what you’ll need to do to secure your ideal remortgage:
Inspect the terms of your existing mortgage to find out when it ends
Contact CLS Money at least 3 months before the term is up. We can guide you through the entire remortgaging process from start to finish and make sure your transfer goes as smoothly as possible
If you are thinking of remortgaging before the term finishes, check that you won’t be subjected to early repayment or early exit fees
Decide why you want to remortgage – whether it’s to save money on interest rates, or to release equity for other purposes
Choose the type of mortgage product that’s going to work best for you, based on the length of your new term and the incentives offered with the deal
Compare what’s on offer from other lenders, as well as your current lender
Review all the costs involved in the remortgage you have chosen - and budget for them accordingly
Instruct a solicitor or conveyancer to handle the legal side of things. He or she will collect everything you need to present to your new lender, including your redemption statement
Sign and return all paperwork quickly to minimise delays
Our brokers can help you find the right remortgage deal.
Take the hassle out of finding and applying for a remortgage by contacting the advisors here at CLS Money. We’ll quickly be able to tell you whether you qualify for a remortgage, which type of deal will best suit your circumstances, and where you need to look for the most competitive rates and terms.
Because we work with the whole of the market, we can connect you with more specialist providers with more flexible lending than some of the big names. We also have access to products that are not available to members of the public, meaning we can often save you more money on your remortgage than if you were to approach your preferred lender directly!
Arrange your free, no-obligation consultation now. You can even book one of our evening or weekend slots if you’re worried that work will get in the way of your mortgage search.
A mortgage is a loan from a bank or building society that enables you to purchase property. The loan is repaid with interest over a number of years, with the term for doing this dependent on your personal financial circumstances.
A mortgage can be held by an individual or jointly between one or more people, but if you do not keep up your repayments, your home could be repossessed by the lender.
Can I remortgage my home?
Most people are able to remortgage their home to get a new mortgage deal. There are many reasons why remortgaging could be a good option for you including:
Getting a better mortgage rate
Having the option to make overpayments
Enjoying a more flexible mortgage
Freeing up cash for some long awaited home improvements
Purchasing additional property
Saving money on your monthly repayments
Reducing your current term
If you would like to know which remortgage options are available to you, get in touch! Our expert remortgage advisors will provide you with a free mortgage review and compare thousands of deals to find the remortgage deal that best fits your needs.
How can I remortgage my home?
The first thing you will need to consider before you remortgage is how much you can afford to pay. You can do this by collating your mortgage paperwork and recent bank statements together, to see what your current interest rate is and how much your monthly outgoings are.
You will also need to check if you will need to pay any additional costs such as; an arrangement fee to your new lender for setting up the mortgage, an exit fee and/or early repayment charges for leaving your current lender, and valuation and legal fees. Some fees can be added to your mortgage.
Remember, if you choose to do this, you will have to pay interest on them. Luckily, most remortgage deals have no or low set up costs. But, it's important to make sure you check first before committing to a new mortgage deal.
Part of our service in ensuring that you get the best remortgage deal, is to check whether a new mortgage deal would be the best option for you, based on the interest rate and any potential fees involved.
How much does it cost to remortgage?
If you are thinking of remortgaging your home, you may find that there are some charges for doing so. The exact fees and precise amount you will pay are dependent on your current mortgage deal and the value of the property you are buying. The typical fees you could be expected to pay are as follows:
Mortgage arrangement fee: Can be paid upfront or added to your mortgage debt. Remember, if you choose to add the Mortgage Arrangement Fee to your mortgage, you will ultimately pay interest on this.
Estimated cost: £1,000 - £2,000
Mortgage broker fee: If use a mortgage broker to help you remortgage, you will need to pay a fee for them to arrange this for you.
Estimated cost: £95 - £495
Valuation and survey fees: Your new mortgage lender may request for your home to be re-valued. The cost for this varies, depending on the survey the lender requests:
Estimated cost: £250 - £600
Legal costs: You may need to use a solicitor to take care of any required legal work for you.
Estimated cost: £850 - £1,500 plus VAT
What happens to my mortgage when I move home?
When you move home, you should be able to transfer your current mortgage to your new property. As you will probably need to borrow more, in order to purchase your new home, your mortgage lender will want to value the new property.
Moving home is however one of the best times to get a better mortgage deal. You will firstly need to check if there are any early repayment charges or exit fees for repaying your current mortgage deal early, which your current lender should be able to tell you.
If there are penalties for leaving your current lender, then you will need to find a new mortgage deal that is sufficiently cheaper to cover these costs. Our mortgage advisors are remortgage experts and can tell you whether a new mortgage deal would be best for you.
Can I buy a property and sell my home at the same time?
In order to buy a new home with a mortgage, you will need to sell your existing home first. However, if you are struggling to sell your home, you could consider renting your property temporarily, until you are able to sell it.
A let to buy mortgage would enable you to lease your current property and buy a new home. Let to buy mortgage lenders will need to see that your rental income will comfortably cover your mortgage repayments. But, if you choose to continue letting your existing property instead of selling it, you will need a buy to let mortgage.
If you think a let to buy mortgage will help you secure the property of your dreams, you will need to apply for both a let to buy and residential mortgage, and ensure that both applications complete at the same time, which we can arrange for you.
Want to know more about the benefits of remortgaging?