How to Remortgage Your Home

Whether you’re a seasoned homeowner or a first-time buyer/owner, it’s essential to understand the process of remortgaging. This guide aims to help UK homeowners learn about remortgaging, when it’s a good thing to consider, how to prepare, and the best way to go about the process.

What is Remortgaging?

Remortgaging is the process of obtaining a new mortgage on a property you already own. This can involve switching from your existing mortgage lender to a new one or negotiating a new deal with your current lender. Homeowners often choose to remortgage to take advantage of lower interest rates or to release equity from their property for home improvements or other purposes.

When is Remortgaging a Good Idea?

1. To Save Money: One of the primary reasons homeowners choose to remortgage is to secure a better mortgage deal with lower interest rates. This can result in significant savings over the remaining term of your mortgage.
2. To Release Equity: Homeowners with a substantial amount of equity in their property may choose to remortgage to access funds for home improvements, debt consolidation, or other financial needs.
3. To Change Mortgage Type: If your circumstances have changed since you first took out your mortgage, remortgaging could allow you to switch to a different type of mortgage that better suits your current situation.
4. Before Your Current Deal Ends: If your existing mortgage deal is about to end, it’s wise to start looking at remortgage options a few months in advance. This will help ensure you can secure a new mortgage deal in time, avoiding the possibility of being moved onto your lender’s standard variable rate (SVR), which is often higher than fixed-rate deals.

Preparing for Remortgaging

1. Assess Your Financial Situation: Before you begin the remortgage process, it’s essential to assess your financial situation. Check your credit report and work on improving your credit score if needed. Lenders will be more likely to offer you a better deal if you have a strong credit history.
2. Calculate Your Loan-to-Value (LTV) Ratio: LTV is the percentage of your property’s value that you’re borrowing through your mortgage. Generally, the lower your LTV, the better mortgage deals you’ll be eligible for. Calculate your current LTV by dividing your outstanding mortgage balance by your property’s value and multiplying by 100.
3. Research Mortgage Deals: Start researching mortgage deals by comparing interest rates, fees, and features. Use comparison websites, speak to mortgage brokers, or consult directly with lenders to find the most suitable remortgage deal for your needs.
4. Gather Documentation: Lenders will require a range of documents when you apply for a remortgage. Be prepared to provide proof of identity, proof of address, recent payslips, bank statements, and details of your existing mortgage.

How to Remortgage Your Home

1. Decide on Your Remortgage Goal: Identify the main reason you want to remortgage, whether it’s to save money, release equity, or change your mortgage type. This will help you focus your search for the right remortgage deal.
2. Speak to Your Current Lender: Before looking at other mortgage providers, contact your existing lender to discuss remortgage options. They may offer you a competitive deal to keep your business, saving you the time and effort of switching lenders.
3. Use a Mortgage Broker or Advisor: Engaging the services of a mortgage broker or advisor can help you navigate the remortgage process and find the best deal for your needs. They have access to a wide range of mortgage products, including deals not available directly to the public.
4. Compare Mortgage Deals: Don’t settle for the first deal you find. Take the time to compare offers from multiple lenders, taking into account interest rates, fees, and any additional features. Be sure to consider the overall cost of the mortgage over its term, rather than focusing solely on the initial interest rate.

1. Apply for the Remortgage: Once you’ve found the right deal, submit your application to the lender. This will involve providing all the necessary documentation, completing a mortgage application form, and paying any associated fees. Be prepared to answer any additional questions the lender may have about your financial situation or property.
2. Property Valuation: Your new lender will arrange a valuation of your property to confirm its current market value. This is important for determining the LTV ratio and the amount you can borrow.
3. Legal Work: A solicitor or conveyancer will handle the legal aspects of the remortgage process, including transferring the mortgage charge from your old lender to your new one. You may be able to use the same solicitor or conveyancer who helped with your original mortgage, or your new lender may have a recommended professional.
4. Completion: Once the legal work is complete and the new mortgage has been approved, you’ll move onto the completion stage. This is when your old mortgage is paid off with the funds from your new mortgage, and your new mortgage agreement begins.

Remortgaging your home can be a smart financial move when done for the right reasons and at the right time. By preparing for the process, researching your options, and working with professionals like mortgage brokers, financial advisors and solicitors, you can secure a better mortgage deal and potentially save thousands of pounds over the life of your loan. Keep in mind that every homeowner’s situation is unique, so take the time to evaluate your needs and circumstances before making any decisions about remortgaging.