What does remortgage mean?
Remortgaging means switching your current mortgage deal to another mortgage deal – either with the same lender or a different one.
Usually, people remortgage when the fixed term on their current mortgage deal ends. If you don’t switch to another fixed term deal when your deal ends, most of the time your lender will slide you onto their standard variable rate (SVR), which can be up to double the interest rate you had before.
Sometimes, people remortgage when they want to unlock some extra money from their property – sometimes called “raising capital” – for things like home improvement projects. To raise capital, you add more of the value of your home onto your mortgage; in other words, borrow more.
Is remortgaging worth it?
Simply put: yes. On average, we save people about £341* a month when we switch their mortgage, compared to them staying with their lender after their fixed term deal ends.
When you don’t switch after your fixed term deal ends, your lender will most likely let you slip onto their standard variable rate (SVR), which can be up to double the interest rate of your fixed term deal.
The takeaway is this: make sure you’re on the best deal you can get, and you’ll be likely to save more money than if you stay with your lender and their standard variable rate.
*Source: Habito data
When can I remortgage?
The best time to start the remortgage process is around 6 months before your existing fixed rate period (usually 2, 3, or 5 years) ends. It can take a few months for your switch to be finalised, and you don’t want to spend even a month on a standard variable rate if you can help it!
Can I remortgage early?
Starting a remortgage more than 6 months before your fixed rate period ends isn’t typically worthwhile because most mortgages will charge a fee for exiting early. That said, your mortgage expert can advise you on whether it’s worth it to remortgage early in your specific case.
How long does a remortgage take?
Remortgaging can take up to 6 months. Finding the right new mortgage and submitting a remortgage application doesn’t usually take too long, but everything that happens after (the bank’s process, and a valuation if it’s needed) can take a while.
That’s why we recommend starting to look for your next mortgage around 6 months before your existing fixed rate period ends!
What if it's not the right time to remortgage?
We’ll always make sure it’s worth your while to remortgage.
We factor in all the costs, including any fees your lender might charge you for switching, to make sure it’s the right time and financially worth your while.
If it’s not, you can leave it with us and we’ll let you know when it’s time to start looking again.
If it’s the right time, we’ll get it done – quickly, simply, and for free.
Do you need a solicitor to remortgage?
If you’re remortgaging to a new lender, then yes, you’ll most likely need a conveyancing solicitor to do the paperwork for that.
If you’re just wanting to borrow more with your current lender, or are switching deals with the same lender (in other words, a product transfer), then you probably won’t need a conveyancing solicitor.
Your mortgage expert will be able to suss out whether it’s cheaper for you to switch lenders and pay for legal work, or if it’s cheaper for you to stay with the same lender!
How much does it cost to remortgage?
If you’re moving to a different lender with your remortgage, you may have to pay for the valuation and legal fees that are needed to switch – but, lots of remortgage deals come packaged with free valuation and legal work.
There’s also the arrangement fee, which is the upfront fee you pay on most mortgages – you can choose to pay it upfront, or add the fee to your mortgage balance (in which case it would gather interest).
The important thing is that even though remortgaging can sometimes have some costs, you’ll usually still end up saving money in the long run by not slipping onto your lender’s standard variable rate. Your Habito mortgage expert will be able to weigh all the costs and savings to work out the best remortgage option for you.
Can I remortgage if I have credit issues?
If your credit history isn’t blemish-free, don’t assume you’re doomed to be stuck on your lender’s standard variable rate. There’s bad credit and then there’s really bad credit – one missed mobile phone payment a few years ago won’t mean much to a lender compared to, say, a county court judgement.
That said, the number and severity of credit history dings you have can affect your chances of securing a good remortgage deal, or any deal at all. Lenders need to know that you’re sensible with your money and can afford to make repayments on your home loan.
Knowledge is power! In the UK, there are three major agencies that lenders use to check your credit report: Experian, Equifax. and TransUnion. Check as many as possible before applying (by law, it’s free to check each once a month), so you know if you need to address any problems, or correct any mistakes.