How Does Remortgaging Work?

A remortgage is simply a new mortgage that repays your existing one. The property doesn’t change hands and you don’t move, you’re swapping the loan secured against your home for a different one, usually to save money when a fixed deal ends, but sometimes to release equity, change the term, or move to a more flexible product. Most homeowners remortgage every few years, and for many it’s the single biggest recurring saving they can make.

Why people remortgage

The most common trigger is a fixed or discounted deal coming to an end, since letting it lapse onto the lender’s standard variable rate is expensive. But there are other reasons: to release equity for home improvements or to consolidate debt; to overpay or shorten the term now that you can afford to; to switch from interest-only to repayment; or to add or remove a borrower after a change in circumstances. Whatever the motive, the lender will still need to be satisfied the new loan is affordable.

How the process works

• 1

  Review your current deal

  Note your rate, balance, term and any early repayment charges. Aim to start 3–6 months before your deal ends.

• 2

  Check your home’s value and LTV

  A higher value or repaid capital lowers your loan-to-value, which can unlock better rates.

• 3

  Compare the whole market

  Weigh new-lender remortgage deals against a product transfer from your current lender.

• 4

  Apply and pass the checks

  The new lender runs a credit, affordability and valuation assessment, much like your first mortgage.

• 5

  Complete the switch

  A solicitor or conveyancer redeems your old loan and registers the new one, often with free basic legals.

Remortgage or product transfer?

You don’t always have to leave your lender. A product transfer, taking a new rate from your existing provider, is quicker and usually skips the affordability check and valuation, but you’re limited to that lender’s deals. A full remortgage to a new lender opens up the whole market and can be considerably cheaper, at the cost of a proper application and a few weeks’ work.

The costs to weigh up

Remortgaging isn’t automatically worth it: you have to net off the costs. Watch for early repayment charges on your current deal (often 1–5% of the balance), arrangement or product fees on the new one, and any exit or valuation fees. Many remortgage deals include free valuation and legal work to offset these. The test is simple: does the interest you’ll save over the new deal’s fixed period comfortably exceed the total cost of switching? If your loan is small, a fee-free deal at a slightly higher rate can beat a headline-grabbing low rate with a big fee.

How much could you release?

If your reason for remortgaging is to release equity, to fund an extension, help a child onto the ladder, or consolidate more expensive debt: the amount available depends on your home’s current value and the lender’s maximum loan-to-value. Borrow up to, say, 85% of the value and the difference between that and your outstanding balance is what you could release, subject to affordability. Bear in mind that turning short-term debt into mortgage debt spreads it over decades: the monthly payment falls, but you can pay far more interest over the life of the loan. It can still make sense, but it’s a decision to take with eyes open.

Fixed, tracker or offset?

A remortgage isn’t only about who lends to you, it’s a chance to reconsider the type of deal. A new fixed rate restores payment certainty; a tracker may appeal if you expect rates to fall and want the freedom to switch without penalty; and an offset mortgage lets savings reduce the interest you pay while keeping the cash accessible, which suits people with meaningful savings or variable income. Each has trade-offs, and the best choice depends on your plans, your attitude to risk and how much certainty you need.

Timing is the part people most often get wrong. Because a remortgage to a new lender behaves like a fresh application, it can take four to eight weeks, so it’s wise to begin around three months before your current deal ends. Most remortgage offers are valid for up to six months, which means you can secure a rate early and still switch to a cheaper one if the market moves before completion. Leaving it to the last minute is what pushes borrowers onto the standard variable rate by default.

For a fuller walk-through of the mechanics, including how long each stage takes, see our answer on how long it takes to get a mortgage, and the wider mortgage guides for related topics. If you’re close to retirement, releasing cash through a remortgage isn’t the only route; our guide on whether equity release is a good idea compares the alternatives. Investments and property values can fall as well as rise, so any equity you release should fit a wider plan.

Finally, don’t assume loyalty is rewarded. Your existing lender’s product-transfer deals are worth checking, but they won’t always match what the wider market offers, and the only way to know is to compare. Weighing a whole-of-market remortgage against a product transfer, including all fees, is exactly the kind of comparison a mortgage adviser does quickly, and it can be worth hundreds of pounds a year.

Related questions