Remortgaging is the process of switching your mortgage to a new lender or product, without moving house. It essentially means taking out a new mortgage to repay your existing one, while remaining in the same property.
Remortgaging can be an effective way to find a better mortgage deal and save money on your monthly repayments. It allows you to take advantage of lower interest rates or switch to a different mortgage type. You may want to remortgage to release equity from your home, consolidate debts, shorten your mortgage term or switch to a fixed rate.
The Remortgaging Process
Remortgaging involves a number of steps and usually takes 2-3 months from start to completion.
Mortgage Comparison
The first step is to compare remortgage deals and find one that best suits your needs and budget. You can use a mortgage broker or comparison site to research rates, fees and lenders. Consider both product features and cost.
In Principle Agreement
Once you find a suitable mortgage product, the lender will undertake initial affordability checks and issue an ‘agreement in principle’. This shows a lender is willing to lend a certain amount, subject to full underwriting.
Full Application
Next, you’ll need to complete a full application form with detailed information about your income, outgoings, credit history, and property. The lender will then begin full underwriting checks.
Valuation and Legal Work
The lender will arrange a valuation of your property and appoint a solicitor to undertake legal work. Solicitors like P.A. Duffy & Co. Solicitors will carry out tasks relating to the remortgaging process, such as completing all relevant paperwork, registering the re-mortgage with the Land Registry, and setting a completion date.
Final Approval
Once underwriting is complete and valuation and legal work are finalized, the lender will issue a final mortgage offer. This details the official loan amount, term, conditions, and interest rate.
Completion
Finally, the solicitor will arrange for your existing lender to be repaid and the new mortgage completed. The property deeds are transferred to the new lender. Your remortgage date is the day your new mortgage completes and starts.
Should I Remortgage?
There are a few key considerations when deciding if remortgaging makes sense:
- Savings – Calculate expected savings from lower rates vs any fees to remortgage. Is it worth it? Could savings be achieved another way?
- Exit Fees – Your current lender may charge exit fees. Factor these in when working out the costs to switch.
- Timing – Consider how long you intend to stay in the property. The savings may not materialize if you remortgage shortly before selling.
- Product Features – Assess if a new mortgage offers features that would benefit you, for example, overpayments or portability.
- Affordability – Be confident you can continue to afford repayments, especially if your circumstances change. Factor in expected interest rate rises.
Discuss your individual circumstances with a qualified mortgage adviser. They can provide tailored remortgaging advice based on your goals, property, and finances.
Remortgaging Costs
Remortgaging comes with some fees and costs to factor in:
- Mortgage Fee – The new lender may charge an arrangement, booking, or product fee. This can be £500+.
- Valuation Fee – The lender will value the property. Expect to pay around £250 for a standard valuation.
- Legal Fees – A solicitor will charge £150-300+ to do remortgage conveyancing work.
- Broker Fees – If you use a broker, allow around £300-500+ for their advice and arranging the remortgage.
- Exit Fees – Early repayment charges from your current lender if still in a deal period. Can be 1-5% of the loan.
- Other Costs – Such as mortgage account setup, funds transfer fee, and interest accrued if completing mid-month.
Factor in all these costs when assessing the value of switching. Get written quotes from your conveyancer and broker.
Finding a Remortgage Deal
There are several options for finding and comparing remortgage products:
- Mortgage Broker – An adviser will compare the whole market and recommend the most suitable mortgages for your needs. This is often the simplest option.
- Price Comparison Sites – Websites like MoneySuperMarket allow you to filter and compare mortgages across a range of providers.
- Lender Websites – Most lenders have remortgage pages on their sites detailing their current product rates and criteria.
- Newspaper/Best Buy Tables – National newspapers feature mortgage best buy tables, updated weekly. A quick way to see top rates.
Make sure to compare both rates and features. Consider set-up costs, loan-to-values, fees and incentives too. Speaking to a broker can help assess your best option.
Remortgaging While Still in a Deal
You may want to switch deals before your current mortgage incentive period ends to avoid being placed on a Standard Variable Rate (SVR).
This is possible, but exit charges from your existing lender may apply if it is still within the early repayment period. Always check with your lender regarding fees.
To remortgage while still in a deal, follow the usual process. But ensure your new mortgage completes after your current deal ends to avoid exit fees. A broker can provide guidance on timing.
Be aware that you may need to pay an increased rate to your current lender during the overlap period. Avoid this by coordinating completion dates.
Use a Remortgage Conveyancer
A key part of the remortgaging process is conveyancing – the legal work involved in transferring property ownership from one lender to another.
This includes:
- Checking property deeds and titles
- Confirming any outstanding mortgages or secured loans
- Agreeing a completion date for the new mortgage
- Registering the property with the new lender
It’s essential to appoint a qualified remortgage conveyancer or solicitor to undertake this work. They will ensure the remortgage is completed smoothly and all legal aspects are handled correctly.
Many lenders provide panels of recommended conveyancers. But you can choose your own, providing they have the necessary experience and qualifications.
Shop around and compare conveyancer quotes. Fees are typically £150-300 but depend on your property type and location. Avoid the cheapest options – it’s a false economy for such important legal work.
Is Remortgaging the Right Option?
Remortgaging offers an opportunity to find a better deal, switch products and release equity. But weigh up the costs versus savings first, considering:
- Your personal goals and timeframe for staying in the property
- Potential monthly savings from reduced rates
- All fees and penalty charges involved
- Exit fees versus incentives on any new deal
Discuss with a qualified adviser whether remortgaging is worthwhile for your situation. They can provide customized advice and product recommendations.
With the right remortgage deal conveyed smoothly, you can improve cash flow and flexibility. But always compare costs against rewards and get guidance from a mortgage professional.
