When you remortgage, you stay in your home but take out a new mortgage with a different lender. Moving to a new deal with your current lender is usually called a “product transfer”.
Remortgaging is common, but why do households choose to switch lender and what should you expect from the remortgaging process?
A remortgage may offer:
- A deal that better suits your circumstances
- A lower-interest deal if you’re on a Standard Variable Rate
- A new, fixed deal to lock in an interest rate
- A loan secured against your home to fund home improvements or make a large purchase
- Equity release
When should I remortgage?
If your mortgage deal with your current lender is coming to an end, you’ve moved onto a less favourable rate at the end of a mortgage deal, or your circumstances have changed, you may find better deals on the market that you want to take advantage of.
For example, you may want to find a longer-term deal on a lower interest rate, or perhaps choose a more flexible deal that allows you to switch more easily if you’re thinking about moving house, or to make overpayments throughout the mortgage term.
It’s recommended that you start looking for a new deal around 4-6 months before the end of your current arrangement.
A remortgage may help you to invest in home improvements or to fund a significant, one-off purchase, but take financial advice and be sure you can afford the repayments.
Your home could be at risk if you can’t make mortgage repayments.
What should I expect when I remortgage?
You can remortgage at any time but fees may be payable, for example early repayment charges if your remortgage completes before the end of your current deal, application and arrangement fees, valuation fees and exit fees.
Legal work is required, and your solicitor or conveyancer will need to report to your new lender before the deal is completed. Lenders may offer to pay legal and valuation fees as part of your deal.
How does the remortgaging process work?
- Agreement in Principle
To check whether your preferred new lender is willing to lend the mortgage amount you’re looking for, you can obtain an Agreement in Principle. At this stage, you don’t need to have settled on any particular deal but you’ll have an indication of the options available to you. It will help you to have an indication of your home’s value at this stage, which you may be able to obtain online or from an estate agent (a fee may be payable).
An Agreement in Principle doesn’t guarantee that your remortgage will be approved.
Remortgage application
Once you’ve found a new mortgage deal that suits your needs, you have an Agreement in Principle and your lender’s happy with your home’s valuation, you can apply for your remortgage. You’ll provide documentation and information including personal details and your ID, financial information such as payslips, other loans and credit details, and details of any current mortgage.
- Property valuation
As your mortgage is secured against your home, your new mortgage lender will require a valuation of your property. Your new lender will obtain its own valuation, as well as undertaking credit checks against you and any other borrowers, such as your spouse or partner.
- Completing your remortgage
Your solicitor or conveyancer will then take care of the legal work, which takes around 4-8 weeks, repaying your previous lender when your new mortgage is completed.
This article has been prepared by Adroit Legal Services and is not intended to constitute legal advice.
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