If you already have a mortgage, you may have heard the term remortgaging. But what exactly does it mean, and when should you consider it? This guide will explain why remortgaging can be a smart financial move, the best times to do it, and what to look out for.
What is Remortgaging?
Remortgaging is the process of switching your current mortgage to a new deal, either with your existing lender or a new one. It doesn’t mean moving home—it’s purely about getting a better mortgage agreement.
People often remortgage to:
- Reduce monthly repayments
- Get a better interest rate
- Release equity from their property
When Should You Consider Remortgaging?
There are several situations where remortgaging makes sense:
1. Your Fixed-Rate Deal is Ending
If your fixed-rate mortgage period is coming to an end, you may be moved onto your lender’s standard variable rate (SVR), which is often higher. Remortgaging early can help you avoid increased payments.
2. Interest Rates Have Dropped
If mortgage rates have fallen since you took out your loan, switching to a new deal could save you hundreds or thousands of pounds over the term.
3. You Want to Reduce Monthly Payments
By remortgaging to a deal with a lower interest rate, you can reduce your monthly repayments, freeing up money for other expenses.
4. You Want to Borrow More or Release Equity
If your home has increased in value, remortgaging can allow you to release equity for:
- Home improvements
- Debt consolidation
- Investing in a new property
How Does Remortgaging Work?
- Check your current mortgage terms – Be aware of early repayment charges (ERCs) and notice periods.
- Compare deals – Use a mortgage broker or online comparison tools to find competitive rates.
- Apply for your new mortgage – Submit the application and provide necessary documents.
- Complete the remortgage – Your new lender pays off your old mortgage, and you start repaying the new one.
Costs to Consider
Remortgaging can save money, but there may be some costs involved:
- Arrangement fees – Typically £500–£2,000
- Legal fees – Usually £300–£600
- Valuation fees – Paid to confirm the property’s current market value
- Early repayment charges (ERCs) – If your current deal hasn’t ended
Always calculate whether the savings outweigh the costs before switching.
Benefits of Remortgaging
- Lower monthly payments – Reduce your financial burden.
- Better interest rates – Save money over the long term.
- Access to equity – Use your property’s value to fund other expenses.
- Consolidate debt – Combine loans and credit cards into a single, manageable payment.
Key Takeaway
Remortgaging is a useful tool for homeowners looking to save money, access equity, or improve mortgage terms. The best times to consider it are when your fixed-rate deal ends, interest rates drop, or your financial situation changes. Always compare deals, factor in fees, and consult a mortgage adviser to ensure you make the most of remortgaging.