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Guide to Remortgaging (UK)
Wondering how to remortgage your home? This guide will take you through everything you need to know about the process, including how much remortgaging your property might cost and what you need to consider before going ahead.
At Echo Finance, we’re whole-of-market mortgage brokers, which means we can compare deals from over 90 different lenders to find the right one for you. We’ll do all the hard work and make sure the process is as smooth as possible – all you need to do is give us a call on 0800 093 4914 or fill in our quick contact form.
What is remortgaging?
Remortgaging simply means switching your existing mortgage to a new mortgage deal, typically with a new lender. Many people choose to remortgage in order to get a better interest rate and save money on their monthly repayments.
You can also remortgage to borrow more money – for example, if you need to make home improvements or consolidate other debts. However, it’s important to remember that this will increase the amount of interest you pay in the long run.
You don’t always have to switch lenders when you remortgage – you can sometimes get a better deal with your current mortgage lender. However, it’s always worth shopping around to make sure you get the best possible deal.
When should I remortgage?
Most mortgage deals have an initial fixed-rate or discount period, after which the interest rate will revert to the lender's standard variable rate (SVR). This is usually much higher than the rate you initially signed up to, so it's worth considering remortgaging before your deal ends in order to avoid paying over the odds.
You can agree to your new mortgage for up to six months before your old one expires, so it's a good idea to start looking for deals well in advance. This will give you plenty of time to compare mortgage deals and find the right one for you.
It's also worth considering remortgaging if your circumstances have changed since you took out your mortgage. For example, if you've had a pay rise or started a family, you might be able to get a better deal by switching to a mortgage that better suits your new situation.
If you're moving home, you'll usually have to pay off your existing mortgage and take out a new one. However, in some cases, it might be possible to transfer your mortgage to your new property. This is known as 'porting' your mortgage and it's worth speaking to your lender to see if it's an option.
How much will it cost to remortgage?
Typically, there are a few costs associated with remortgaging:
- Early repayment charges: if you're still within your fixed-rate or discount period, you may be charged for switching to a new deal before it expires. This is called an 'early repayment charge'. These charges are typically around 1-5% of your outstanding mortgage balance but can vary depending on your lender and mortgage deal.
- Arrangement fees: most mortgage lenders will charge an arrangement fee for setting up your new mortgage, which can range from a couple of hundred pounds up to 1% of the mortgage.
- Valuation fees: you may need to pay for a property valuation in order to remortgage, although some lenders will cover this cost.
- Legal fees: you'll need to instruct a solicitor or conveyancer to carry out the legal work associated with remortgaging, which typically costs between £500 and £1,500.
- Mortgage Broker Fees: if you use a mortgage broker to help find the best deal for you, they may charge a fee for their services. At Echo Finance, we offer free initial consultations and only charge a fee if we successfully arrange your mortgage.
The good news is that many lenders will offer cashback or other incentives to encourage people to remortgage with them, which can help offset some of the costs.
It's also worth bearing in mind that if you're remortgaging to save money on your monthly repayments, the upfront costs may be offset by the savings you make over the long term.
Is remortgaging right for me?
While remortgaging can be a great way to save money on your mortgage payments, it's not right for everyone.
Before deciding to remortgage, consider the following:
- Are you happy with your existing lender? If so, you might be able to get a better deal by switching to a new mortgage deal with them, rather than moving to a new lender.
- How long do you have left on your current mortgage? If you're coming to the end of your fixed-rate or discount period, you might be able to get a better deal by switching to a new mortgage.
- Are you planning on moving home in the near future? If so, you might want to wait until you move to secure a new mortgage on your new property.
- Are your circumstances likely to change in the near future? If you're planning on starting a family or making any other major life changes, it might be worth remortgaging now to get a mortgage that better suits your needs.
- Do you have any equity in your property? If not, you may struggle to remortgage as most lenders will require at least 10-15% equity, giving a Loan to Value (LTV) of 85-90%.
- Are you up-to-date with your repayments? If you've fallen behind on your payments, you might not be able to remortgage until you've caught up.
If you're not sure whether remortgaging is right for you, our team of mortgage experts can offer impartial advice and help find the best deal for your circumstances.
To speak to one of our advisers, call us on 0800 093 4914 or request a callback and we'll call you.
Remortgage Options
Once you've decided that remortgaging is right for you, it's time to start looking at your options. The right remortgage deal for you will depend on your individual circumstances, including the amount of equity you have in your property, how much you need to borrow and the term of your mortgage.
Here are some of the most common remortgage options:
- Product transfer: this is where you switch to a new deal with your existing lender. This can be a good option if you're happy with your existing lender and want to secure a lower interest rate.
- Remortgage with additional borrowing: this is where you take out a new mortgage with a new or existing lender and borrow additional money. This can be a good option if you need to make home improvements or consolidate debts.
- Remortgage to a different lender: this is where you switch to a new mortgage deal with a new lender. This can be a good option if you're unhappy with your existing lender or want to see what deals are available from other providers.
In terms of the mortgage products available, there are a few different options to choose from, including fixed-rate, tracker and discount mortgages.
Fixed-rate mortgages offer the security of knowing that your interest rate will stay the same for a set period of time, usually 2-5 years. Having a fixed rate mortgage can make budgeting easier as you'll know exactly how much your mortgage repayments will be during this time.
Tracker mortgages typically follow the Bank of England's base rate, so if rates rise, your repayments will go up, and vice versa. This can make budgeting more difficult as your repayments can fluctuate, but you could end up saving money if rates fall.
Discount mortgages offer a discount off the lender's Standard Variable Rate (SVR) for a set period of time, usually 1-5 years. This means that your interest rate could rise when the discount period ends, so it's important to be aware of this before taking out a discount mortgage.
To find out which remortgage option is right for you, call us on 0800 093 4914 or request a callback and we'll call you.
How much can I borrow?
The amount you can borrow when remortgaging will depend on a number of factors, including the value of your property, the calculated Loan to Value, your income and your existing mortgage balance.
Most lenders will lend up to 95% of the value of your property, although this can vary depending on your individual circumstances. Your existing mortgage deal might have a higher or lower Loan to Value (LTV) than what you're looking for with a new deal.
To find out how much you could borrow, use our quick and easy mortgage calculator.
What do I need to apply for a remortgage?
When you apply for a remortgage, you'll need to provide some documentation so that the lender can assess your application. This might include:
- Your most recent payslips
- Bank statements
- Details of any other debts or loans you have outstanding
- Details of your outgoings, such as utility bills, council tax and credit card payments
- Your P60
- Proof of ID, such as a passport or driving licence
If you're self-employed, you might need to provide additional documentation, such as your last three years' worth of annual accounts and tax returns.
I have a bad credit score – can I still remortgage?
If you have a bad credit score, it might be more difficult to be approved for a remortgage, but it's not impossible. There are specialist lenders who offer mortgage products for people with bad credit, so it's worth speaking to an expert to find out what your options are.
To speak to a mortgage expert about remortgaging with bad credit, call us on 0800 093 4914 or request a callback and we'll call you.
Can I remortgage if I'm self-employed?
If you're self-employed, you might find it more difficult to be approved for a remortgage, but there are mortgage products available for self-employed people. It's important to speak to an expert to find out what your options are, as the application process can be different to that of a standard mortgage.
To speak to a mortgage expert about remortgaging if you're self-employed, call us on 0800 093 4914 or request a callback and we'll call you.
Speak to a Remortgage Expert
Seeking advice from a qualified expert offers you extra protection and peace of mind that you're making the right decision for your individual circumstances, and if the mortgage turns out to be unsuitable, you can complain to the Financial Ombudsman Service (FOS).
If you elect for the ‘execution-only’ route, you will not have the same level of protection, with fewer circumstances where you can complain to FOS.
We search the whole of the market to find the best deal for your individual circumstances. We’re independent so we don’t have any allegiances to any particular lender, meaning we can give you honest and impartial mortgage advice. Our team take care of all the paperwork and ongoing administration so once you give us the go-ahead you can leave it all to us.
If we think your best option is to remain with your current mortgage deal, we’ll tell you. We only get paid if we successfully arrange your mortgage, and then the fee is normally paid by the lender.
To get started, call us on 0800 093 4914 or request a callback and we'll call you.
Find your local adviser
Frequently Asked Questions
Below you will find the answers to the questions we hear most often from Echo Finance customers:
A mortgage broker, or a mortgage advisor, is an intermediary who acts as a conduit between an aspiring borrower and a lender. It is their job to provide the mortgage applicant with impartial advice, help them choose the right product and arrange the deal with the lender.
Brokers provide services including advice on which type of mortgage to choose, providing access to exclusive rates through their lender contacts, and application support. Some can offer advice on all areas of the mortgage market, while others specialise in niche fields such as buy-to-let, bad credit, commercial finance, first-time buyers or self-employed borrowers.
People choose to apply for their mortgage through a broker because it can boost their chances of finding the right deal, while saving time and money in the long run.
- Residential mortgages: Everything from fixed-rate to tracker mortgages for first-time buyers, homemovers and remortgage borrowers
- Specialist mortgages: For borrowers who fall outside of standard lending criteria, including people with bad credit, self-employed professionals and more
- Later-life lending: Including advice on equity release, mortgages for pensioners and retirement interest only (RIO) mortgages
- Bridging & Commercial: We have specialist advisors on hand for commercial mortgages, bridging loans, development finance and more
- Insurance & Protection: Including life, home and critical illness cover for families and individuals, as well as landlord and business protection insurance
Echo Finance is regulated by the Financial Conduct Authority and is reviewed annually by an independent compliance company. All of our brokers and advisers hold industry-standard qualifications, such as CeMAP, CeRER and DipMap, where required.
We are committed to providing advice through the channels that best suit your needs. Our brokers can provide advice via phone, email, video and web chat from anywhere in the UK, but we also aim to offer face-to-face appointments for those who request them.
