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What is a remortgage?

A remortgage means replacing your current mortgage with a new one, often with a different lender. If you stay with the same lender but change your deal, it’s called a product transfer or rate switch. 

How does remortgaging work?

Remortgaging involves applying for a new mortgage with a different lender. Before applying, it’s important to check the lender’s criteria and do an affordability check. 

You’ll need to provide documents like bank statements and proof of income. The new lender will check your credit history, assess if you can afford the new mortgage, and do a basic valuation of your property. 

Is remortgaging a good idea?

When your mortgage deal ends, you usually move to your lender’s Standard Variable Rate (SVR), which is often higher than the initial rate, and can change over time.

Remortgaging can help you avoid these higher costs. Getting a new fixed rate can also give you peace of mind because your payments will stay the same for a set period, making it easier to budget.

However, remember that switching to a new deal might include Early Repayment Charges.

Why should I remortgage?

There are several reasons to remortgage, including:

Remortgage to get a new interest rate

You might find better rates, especially if your loan-to-value has decreased. Even if you are coming off a very low rate, reviewing your options could reveal better deals than settling for your lender’s follow-on rate.

Remortgage to make changes to your mortgage

For example, you might want to shorten the overall term.

Remortgage to release equity

If you have enough equity in your home and meet the affordability requirements, you can borrow more to get a lump sum of cash. This can be used, for example, to pay for home improvements, to buy out an ex, or as a deposit for a rental property purchase.

Remortgage to consolidate debt

Some people use a remortgage to consolidate high-interest debts, such as credit cards, into a lower-interest mortgage. This can make it easier to manage. Think carefully before securing debts against your home.

Do you get money when you remortgage?

Yes, if you have successfully applied to borrow more than you owe to your current lender.

The extra money will be paid into your bank account after your lender is repaid.

Why The Mortgage Store Chorley?

Exclusive rates you won’t get directly from lenders

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A dedicated point of contact from initial enquiry right through to completion and beyond

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Appointments seven days a week, to best suit your schedule

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Ongoing rate monitoring until completion as standard

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Do you have questions about mortgages? Want to know what your options are? We're happy to help.

How much equity do I need in my property to remortgage?

The minimum amount of equity needed varies by lender, and depends on what you want to do. For example, you may need more equity if you are consolidating debt compared to if you just want a new like-for-like deal.

Generally, most lenders need at least 10% equity to consider a remortgage. If you have less, a rate switch with your current lender might be better.

You can’t remortgage if you are in negative equity, which means owing more on your mortgage than your home is worth.

What costs are involved with remortgaging?

Some remortgage deals have very low or no up-front fees.

Valuation

The lender need to value your property. Some deals include a free valuation, so you don’t have to pay for this.

Legal fees

Some deals also cover standard legal fees. In these cases, the lender picks the firm of solicitors that will act for them and for you.

Alternatively, you might choose a deal where you pay for the legal work yourself, which gives you the freedom to choose your own solicitor. You might get a small amount of cashback from the lender instead of free standard legal fees.

You need a solicitor  to handle the transfer between banks, including updating Land Registry.

Associated costs

There may other costs such as application fees, exit fees, and Early Repayment Charges. It’s essential to carefully consider the costs and benefits of remortgaging and to compare offers from different lenders to make an informed decision based on your financial goals and circumstances.

Do you need proof of income to remortgage?

Yes. Misrepresenting your income can be considered fraud.

Some lenders can verify your income automatically but others will ask for documents.

Mortgage brokers also need proof of income before submitting an application.

Do they check affordability when you remortgage?

Yes. A remortgage requires credit and affordability checks by the new lender to ensure you meet their criteria.

What if I can’t afford to remortgage?

If you can’t afford to remortgage, you’ll switch to your current lender’s follow-on rate.

However, many lenders offer rate switch deals, where you choose a new fixed, tracker, or discounted rate with the same lender.

If you don’t borrow more or change the mortgage term, there may not be an affordability check. However, you must usually be up to date with your payments.

Do you have a question?
We know it isn't everyday that you think about mortgages. It's only natural to have questions, and we're happy to help with the answers. After all, we deal with this sort of thing all the time!

When should I remortgage?

You can remortgage at any time, but there may be Early Repayment Charges and exit fees if you do it while still tied into a deal.

Most people remortgage at the end of their fixed, tracker, or discounted rate period to avoid these charges and higher follow-on rates.

A mortgage offer is typically valid for up to six months, so it’s a good idea to start looking for deals up to six months before your current deal ends. This gives enough time for legal checks and should ensure your new mortgage starts right after your current deal ends.

Can I remortgage with bad credit?

Potentially, yes, but it depends on your credit issues.

You might need a specialist lender, which can have higher interest rates. If you’re with a mainstream lender now, see if you can do a rate switch before turning to specialist lenders.

Look at our page on bad credit mortgages for more information.

What documents do I need to remortgage?

You’ll need proof of ID, proof of address, bank statements, and income verification.

The exact requirements depend on your situation. Your advisor can guide you.

How can The Mortgage Store Chorley help with a remortgage?

Are you considering a remortgage but feeling overwhelmed? Let our experienced mortgage broker help you.

At The Mortgage Store Chorley, we help homeowners like you navigate the complexities of remortgaging with ease.

We have access to lots of lenders, and will assess your financial situation to secure the best rate and terms for you. Save time, money, and hassle with our help, and make informed and financially sound decisions.

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE