Remortgage
A remortgage is when you take out a new mortgage deal on a property you already own.
What is a remortgage?
A remortgage is when you take out a new mortgage deal on a property you already own. This might be to replace an existing mortgage or to borrow additional money against the property.
You may be looking to remortgage for several reasons – you could be coming to the end of the initial rate on your current mortgage and want to move to a different deal with your existing lender.
Other reasons to remortgage could include if you’re looking to borrow more on your mortgage to free up some cash for a home renovation or extension, or to help pay off some debts.
Whatever your motivation, remortgaging can be a great way of finding better mortgage terms or getting better interest rates and ultimately saving money on your mortgage payments.
WHEN CAN YOU remortgage?
Its advisable to start the remortgage process around 6 months before your current deal ends. If you don’t and you’re moved onto your lender’s Standard Variable Rate (SVR), you could end up paying more for your mortgage each month.
Can everyone remortgage?
Many borrowers have the potential to save money through remortgaging, but it’s not the right choice for everyone.
We’ve listed some examples of when it might not be suitable below. If you fit one or more of these descriptions, give us a call. We’ll help you figure out what your options are.
If you more than 6 months or if you’ve recently taken out a fixed or discounted rate mortgage, you may find that your early repayment charges make remortgaging not a financially viable option for you.
Many lenders only accept remortgage applications when the loan required is above a minimum level of £25,000. Fees can reduce any savings you might make. In this situation, you may be better off taking a new deal / product transfer with your existing lender.
Lenders assess remortgage applications to ensure you can repay your loan. A request for current income and future job security may be required. If you’ve changed your work status from employee to self-employed you may find it difficult to find a lender who can accept a remortgage based on your current employment status.
If you’ve had some problems maintaining credit agreements in the recent past, you may find you’re ineligible to mainstream lenders. In this case, you may be better off staying with your current lender and taking a new product with them. We suggest you provide us with a copy of your credit file so we can check the likelihood of a successful remortgage or arrange a product transfer for you.
Most lenders will decline those who currently have an interest-only mortgage with a high LTV (loan to value ratio), e.g. if your mortgage balance is above 75% of the value of your property most lenders will decline the application on the basis that there isn’t enough equity in it to realistically downsize at the end. It may be best to stick with your current lender and take a new deal with them.
HOW LONG DOES IT TAKE to remortgage?
Remortgaging takes, on average, about 4 – 6 weeks but it can take less. It’s much more straightforward than buying a new home; the deeds of the property are already registered in your name when you remortgage meaning that a large administrative portion of the mortgage process is eliminated.