Remortgaging, switching to a new mortgage deal, either with your existing lender or a new one, is something most homeowners will do multiple times over the life of a mortgage. Done at the right time, it can save a significant amount of money; left too late, it can mean paying considerably more than necessary. Here’s how the process works.
Why People Remortgage
The most common reason to remortgage is that a current fixed-rate deal is coming to an end. Once a fixed term finishes, most lenders move borrowers onto their standard variable rate, which is typically far higher than the rates available on a new fixed deal, meaning doing nothing at the end of a fixed term is usually the most expensive option available. Beyond simply switching to a better rate, people also remortgage to release equity for home improvements or other purposes, to consolidate other debts, or to change their mortgage term or structure.
When to Start the Process
It’s generally worth starting to look at remortgaging around three to six months before a current deal ends. Many lenders allow a new rate to be secured in advance, with the option to switch to a better deal if one becomes available closer to completion, giving borrowers a form of protection against rates rising in the meantime, without losing the ability to benefit if they fall instead. Waiting until a fixed deal has already ended before starting to look risks a period on a lender’s standard variable rate, which can be considerably more expensive.
Checking Your Loan-to-Value Position
Loan-to-value, the mortgage amount as a percentage of the property’s value, is one of the biggest factors in what rate is available on remortgage. If a property’s value has increased since the original purchase, or if the mortgage balance has been paid down, the loan-to-value ratio may have improved, potentially unlocking access to better rates than were available previously. It’s worth getting an up-to-date sense of a property’s value before starting the remortgage process, since this can materially change which deals are on offer.
Staying With Your Lender vs Switching
Borrowers generally have two options: a product transfer, staying with the existing lender and simply moving to a new deal, or a full remortgage with a different lender. A product transfer is usually quicker and involves less paperwork, since no new affordability assessment or legal work is typically required. Switching lenders can sometimes secure a better rate, but it usually involves a fresh affordability check, valuation, and legal fees, which need to be weighed against any savings from a lower rate.
Costs to Factor In
Remortgaging isn’t always free. Depending on the route taken, there may be arrangement fees, valuation fees, and legal fees to account for, particularly when switching to a new lender. Some of these costs can be added to the mortgage rather than paid upfront, though doing so increases the amount being borrowed and the interest paid over time. It’s worth comparing the total cost of switching against the savings from a better rate, rather than focusing on the interest rate alone.
Early Repayment Charges
If a remortgage happens before a current fixed deal has ended, an early repayment charge may apply, often a percentage of the remaining mortgage balance. This can sometimes outweigh the savings from switching early, so it’s worth checking whether an existing deal has such a charge, and how much it would be, before deciding to remortgage ahead of the natural end date.
The Bottom Line
Remortgaging at the right time is one of the more straightforward ways to keep mortgage costs under control, but timing matters considerably, starting the process a few months ahead of a deal ending, and comparing both product transfer and full remortgage options, gives the best chance of securing a genuinely favourable rate rather than defaulting to whatever a lender offers automatically.