Remortgaging means changing your current loan to a new mortgage deal. This could be with either your existing lender or a new mortgage provider.
Reasons to remortgage
Remortgaging most commonly happens when the introductory mortgage rate ends, and home owners wish to find a more competitive rate.
Reasons for remortgaging a property include:
Reducing your monthly payments by changing to a different rate
Releasing equity in your property (e.g. to provide funds for building work)
Changing to a fixed-rate to assist with your monthly budgeting
To pay off your mortgage sooner
It is important to ascertain why you wish to remortgage your property, as this will help you decide which mortgage type would be most appropriate.
Where to start
Investigate the different types of mortgage product available, and determine which would suit you best, whether this would be fixed, variable or tracker. Make sure, when comparing the rates of different mortgages, you are comparing like for like.
Speak to your current lender to see if they can offer you a better deal for your remortgage. This can be the cheapest option as you may be able to avoid paying for a new valuation or for another local authority search. You may possibly save on legal fees too.
Once you know what your current lender can offer you, look around to find the best mortgage options available to see if another lender can improve on the offer.
Remember to ask your current lender about early redemption penalties. You do not want to have a large bill for leaving your mortgage before the agreed date.
What is involved in remortgaging?
You will need to submit specific paperwork to your new chosen lender. This includes:
Proof of your income
Information about your expenses and outgoings
Proof of your residency, such as a passport or driving licence
Your lender will also conduct a credit history.
The ability to remortgage is based on the individual circumstances of a home owner. Since the Mortgage Market Review in 2014, the criteria for lending is likely to be stricter than when you got your initial mortgage, so it would be advised to get mortgage advice to help you find the right deal.
Once your mortgage in principle has been agreed, your home will require a valuation. For remortgaging this can range from a ‘drive by’ valuation to a surveyor visiting your home for a detailed inspection.
If the lender’s valuation is less than expected, you can get a Chartered Surveyor to survey your property and provide a valuation to see if your lender will reconsider their original valuation.
You will need to appoint a conveyancing solicitor to:
Undertake a local authority search or to organise search indemnity insurance (a cheaper policy covering anything that might have been discovered in a search)
Organise the transfer of debt from one lender to the other
The process of remortgaging a property usually takes between 4 and 8 weeks.
Costs of remortgaging
It is important to factor in all the costs involved in remortgaging a property, as you need to ensure the cost of remortgaging is not higher than the saving you would make switching to a new mortgage deal.
The fees involved in remortgaging consist of:
There is no stamp duty to pay on remortgaging.
Do I need a solicitor for re-mortgage conveyancing?
Conveyancing for remortgaging is cheaper than when buying or selling a home, as it involves the same property however legal advice and paperwork would still be required. If you do decide to use a solicitor, you can find a re-mortgage conveyancing solicitor who can undertake your remortgage in your area.
If you have any questions regarding mortgages, view our Mortgages Q&A to see if any previous answers can provide you with the information you require.