What Is Remortgaging?
Remortgaging means switching your existing mortgage to a new deal - either with the same lender (a product transfer) or with a different lender (a full remortgage). The most common reason to remortgage is that a fixed-rate or discounted-rate period has ended and the mortgage has moved onto the lender's Standard Variable Rate (SVR), which is typically significantly higher than available fixed-rate products. Remortgaging onto a new competitive fixed rate reduces monthly payments and total interest cost.
Remortgaging can also serve other purposes: releasing equity from the property (increasing the loan to fund home improvements, debt consolidation, or a deposit on another property); switching from interest-only to capital and interest; changing the mortgage term; or restructuring the mortgage to remove or add a borrower.
When to Remortgage - The Timing Decision
At the end of a fixed-rate period. This is the most important remortgage trigger. When your fixed period ends, your mortgage automatically moves to the lender's SVR - typically 2-4% higher than the rate you were paying. On a £200,000 mortgage, the difference between a 4.5% fixed rate and a 7% SVR is approximately £250 per month (£3,000 per year). The cost of inaction is substantial and immediate.
Start looking six months before your fixed period ends. Most lenders allow you to lock in a new product (with the existing lender via product transfer, or with a new lender via remortgage) up to six months before the switch date, guaranteeing the rate even if rates rise in the intervening period. The new deal does not cost anything to reserve and you simply do not proceed if a better option emerges.
Mid-fixed-period: when it is worth paying the ERC. Early repayment charges (ERCs) typically range from 1% to 5% of the outstanding mortgage balance. On a £200,000 mortgage, a 3% ERC is £6,000. This sounds prohibitive - but if remortgaging from a 5.5% rate to a 4.0% rate saves £1,500 per year in interest, the ERC is recovered in four years and the borrower benefits thereafter.
The calculation to make is: ERC cost plus any remortgage fees, divided by the monthly interest saving, equals the break-even period in months. Our remortgage savings calculator does this calculation automatically. Where the break-even is within the remaining fixed period, mid-period remortgaging makes financial sense. Where the fixed period ends within 12-18 months, it typically makes sense to wait.
When your property value has increased. A significant rise in your property's value reduces your LTV and may push you into a lower LTV band - unlocking better rates. If you bought at 90% LTV and your property has risen in value so your LTV is now 75%, remortgaging accesses rates up to 1% lower than your current product. A broker can advise whether a formal valuation is worth commissioning to confirm the improved LTV position.
Use our remortgage savings calculator at /remortgage-calculator to assess the saving from switching, factoring in any ERC and fees, before you instruct a broker.
Product Transfer vs Full Remortgage
Product transfer (staying with your existing lender). A product transfer is the simplest form of remortgage: selecting a new fixed-rate product with your current lender when your existing product ends. Advantages: no conveyancing required; no credit search in most cases; can usually be completed online in minutes; and quick completion. Disadvantages: you see only your existing lender's products - not the whole market. A product transfer rate is not necessarily the best rate available, and lenders know that many borrowers take the path of least resistance.
Full remortgage (switching lenders). A full remortgage involves applying to a new lender, which undertakes full underwriting (including a credit search and property valuation) and issues a new mortgage offer. Conveyancing is required to transfer the title - though most lenders have free legal work packages for straightforward remortgages. Advantages: access to the full market; potentially significantly better rates; and the opportunity to restructure the mortgage (change term, add or remove borrowers, increase the loan). Timescale: typically four to eight weeks.
The Remortgage Process Step by Step
The remortgage journey runs through five clear stages, from early comparison to completion on the agreed switch date.
- Step 1: Start comparing six months before your fixed period ends. Use our remortgage savings calculator to assess the saving from switching, factoring in any ERC and fees.
- Step 2: Instruct a broker to compare the full market against your existing lender's product transfer rate. In many cases, a broker will identify better rates that more than justify the slightly longer switching process.
- Step 3: Select a product and submit the remortgage application. Your broker handles the lender relationship and document gathering.
- Step 4: The new lender conducts a credit search and property valuation (often a desktop valuation for straightforward cases). Legal work proceeds via the lender's solicitors or your own conveyancer.
- Step 5: Mortgage offer is issued. On the agreed switch date, the new mortgage replaces the old one and you begin paying on the new product.
Remortgaging to Release Equity
If your property has increased in value or your mortgage balance has reduced, you may have equity that can be released through remortgaging to a higher amount. The additional borrowing can be used for home improvements, debt consolidation, a deposit on a second property, or other purposes. The new mortgage is larger, which increases the monthly payment - use our mortgage repayment calculator to model the new payment before committing.
Where releasing equity would create a high LTV and the additional cost is significant, a second charge mortgage - secured against the property but without disturbing the existing mortgage - may be more cost-effective, particularly if the existing mortgage has a significant ERC.
Common Remortgaging Mistakes
A handful of avoidable errors cost remortgaging borrowers the most. Watch for each of these.
- Staying on the SVR by default: the most expensive mistake. Moving onto the SVR for even six months unnecessarily costs thousands. Set a diary reminder six months before your fixed period ends.
- Only checking your existing lender's product transfer rates: your lender knows you are likely to take the easy option. A broker comparison takes a few hours and frequently surfaces meaningfully better rates.
- Not factoring in fees: arrangement fees of £999-£1,999 are common. On a small mortgage, a fee-free product at a slightly higher rate may be cheaper in total than a low-rate product with a high fee. Calculate total cost over the fixed period, not just the headline rate.
- Remortgaging without considering the full debt picture: if you have other debts, a debt consolidation remortgage may improve the overall financial position - but increases total interest cost over the longer mortgage term. Model this carefully before including debts in the remortgage.