Remortgaging is the process of paying off your current mortgage and replacing it with a new one on the same property, without moving house.
Most homeowners remortgage to get a lower interest rate, move to a deal that suits them better, or release some of the value built up in their home. In the US, the same process is usually called refinancing. This guide explains how remortgaging works, what it costs, and when it tends to make sense.
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Why do people remortgage?
Most homeowners in the UK remortgage every two to five years, usually when their current deal is about to end. There are four common reasons to switch.
Reason | What it means |
Your deal is ending | When your fixed or tracker rate finishes, you move onto your lender’s standard variable rate (SVR), which is usually more expensive. Remortgaging lets you avoid it. |
Lower interest rates | If rates have dropped, or your home has risen in value, you may qualify for a better deal and lower monthly payments. |
You borrow more than you currently owe to free up cash, for example for home improvements, debt consolidation, or to buy a second property. | |
Changing your term | You can shorten your term to clear the loan sooner, or lengthen it to lower your monthly payments. |
Remortgage vs product transfer: what is the difference?
‘Remortgage’ usually means moving to a different lender. Switching to a new deal while staying with your current lender is technically a product transfer (sometimes handled as part of your mortgage renewals). A product transfer often involves less paperwork, so it is worth comparing outside deals against your current lender’s offer.
| Remortgage | Product transfer |
Lender | A new lender (sometimes your current one) | Stay with your current lender |
Paperwork | Full application, credit and affordability checks | Usually less paperwork |
Fees | May include valuation and legal fees | Often fewer fees |
Choice of deals | The whole market | Only your lender’s own deals |
Key remortgage terms explained
- Remortgage: moving your mortgage to a new deal, often with a different lender.
- Product transfer: switching to a new deal while staying with your current lender.
- Standard variable rate (SVR): the lender’s default rate you move onto when your fixed or tracker deal ends. It is usually higher.
- Loan-to-value (LTV): the size of your mortgage compared with your home’s value, shown as a percentage.
- Early repayment charge (ERC): a fee some lenders charge if you leave your deal early.
How does remortgaging work? The step-by-step process
The remortgage process usually takes four to eight weeks, though it can be quicker if you stay with your current lender. You can read more on how long it takes to remortgage. Here are the steps.
- Check your current deal. Find your deal end date and whether an early repayment charge applies.
- Work out your loan-to-value. This affects which rates you can get (see below).
- Compare deals or get advice. Check your current lender’s offer, then compare it against the wider market.
- Get an Agreement in Principle (AIP). This shows how much you could borrow and usually involves only a soft credit check, so it does not affect your credit score.
- Submit your full application. You provide details of your income, finances and current mortgage. The lender runs full credit and affordability checks.
- Valuation and legal work. The lender arranges a valuation of your home, and a solicitor handles the conveyancing.
- Complete. Your new mortgage pays off the old one, and your new deal begins.
How to work out your loan-to-value (LTV)
Divide the amount you still owe by your home’s current value, then multiply by 100. For example, if you owe £150,000 on a home worth £250,000, your LTV is 60%. The lower your LTV, the better the rates you can usually access.
Remortgage fees explained
Switching is not always free, so weigh the fees against the savings. You can see a full breakdown on our remortgage fees guide.
Fee | What it is |
Early repayment charge | Charged by your current lender if you leave your deal early. |
Exit or deeds release fee | A small admin fee to close your old mortgage. |
Valuation fee | To confirm your property’s value. Some lenders include this free. |
Arrangement or product fee | To set up the new deal. |
Legal or conveyancing fee | For the legal transfer. Some deals, including some cashback remortgages, cover this. |
What to consider before you remortgage
- Affordability and credit: a remortgage is a new loan, so you will need to pass credit and affordability checks. It is worth checking your credit record is correct before you apply.
- The maths: add up the fees and compare them against what you would save over the new deal. A lower rate is not always worth it if the fees are high.
- Timing: the best moment is usually near the end of your current deal, to avoid early repayment charges. See when to remortgage and whether you should remortgage now.
- Your circumstances: requirements differ if you are self-employed, or if you want a buy-to-let remortgage.
Getting expert remortgage advice
With so many deals to choose from, it can be hard to know where to start. Our online platform lets you compare remortgage deals from lenders across the UK, with up-to-date rates. Once you find one that fits, our advisers take the time to understand your situation and help you choose the most suitable option. If you are unsure about anything, get in touch and we will help you make sense of it.
FAQs
The main purpose is to move off a deal that no longer suits you and onto a better one, whether that means a lower rate, lower monthly payments, a different term, or releasing some equity from your home.
It depends on your situation. Remortgaging can save money and give you more flexibility, but it can cost more than it saves if your fees are high or you leave your current deal early. The maths is what matters.
Only if you choose to release equity, which means borrowing more than you currently owe. A standard remortgage that simply replaces your deal does not put cash in your pocket, although some deals offer cashback.
Say you owe £150,000 on a five-year fixed deal that is ending. Rather than slipping onto your lender’s SVR, you take a new £150,000 mortgage with a different lender at a lower rate. The new loan clears the old one, and your monthly payments fall.
Avoid leaving your current deal early without checking the early repayment charge, taking a new deal on rate alone without counting the fees, or applying for new credit just before you apply, as this can affect your affordability checks.
It means replacing your existing mortgage with a new one on the same home. You are not moving house and you are not taking out a second, separate loan. The new mortgage simply takes the place of the old one.
Often yes, though your choice of lenders and rates may be narrower. It helps to check your credit record for errors first and, if needed, speak to an adviser who can point you towards lenders more likely to accept your application.
About the Author:
Matt is a top contributor at Speedy Remortgage and has worked in the financial services industry for over a decade now. Through his expertise on mortgage and remortgage has helped hundreds of customers to achieve their property goals.