What is a remortgage?

  1. Toby from Nuneaton
  2. Finance questions and answers


I’ve been with my current mortgage provider since first taking out the mortgage when I bought my home, which was 10 years ago. I’m now wondering whether I could be paying less and heard that I could get a remortgage. What is a remortgage, and how can I remortgage my property? Do I get the remortgage on the full value of the property or just the part I haven’t paid off yet? I don’t really have much information on remortgages so I’d like to find out more before progressing further. Thank you.


At its simplest remortgaging just means that you shop around for a better deal and replace your current mortgage with one from another lender.

As the mortgage is generally the single biggest commitment it can pay to review your deal regularly to make sure that you are getting the best rate. Once a deal comes to an end you will often revert to the lender’s standard variable rate, which could be at a rate of a couple of per cent more than other deals on the market.

First of all you should find out what your current rate is and whether there are any early repayment charges if you were to switch your deal. These penalties can be costly but after 10 years without a change it’s likely you will be free to shop around.  Your current lender may offer you an alternative rate to switch to but you should still compare that with the rest of the market.

There are costs that can come with remortgaging so don’t simply look for the lowest rates.  There could be an arrangement fee on a new deal plus a valuation fee and legal costs to make the switch. These can mount up and quickly erode any savings.

However, many lenders offer deals that can cover some or all of these costs including free basic valuation and legal work.  It therefore makes sense to look at the overall value of a deal rather than just the interest rate, especially for those with smaller mortgages.

The new lender will assess your application based on normal criteria. Once it goes through you will effectively pay the old mortgage off by replacing it with the new deal.  Some people may even take a larger mortgage to fund something like home improvements but of course that is increasing your mortgage and there will be more interest to pay over the remaining term.

David Hollingworth

David Hollingworth

London & Country Mortgages

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