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Last Updated: 22nd August 2023

What is a Remortgage?

A remortgage, also known as refinancing, is the process of switching your existing mortgage to a new lender or renegotiating the terms with your current lender. Unlike a mortgage for purchasing a new property, a remortgage is specifically designed for homeowners who already have an existing mortgage in place. By doing so, you can take advantage of better interest rates, access additional funds, or consolidate debts, among other potential benefits.


How Does a Remortgage Work?

When you initially secured your mortgage, the terms and interest rates were based on various factors, such as your credit score, the property’s value, and prevailing market conditions. Over time, these factors can change, and so can the mortgage products available on the market. This is where remortgaging comes into play.

When you decide to remortgage, you’ll need to assess your current financial situation and your long-term goals. If you find a better mortgage deal with lower interest rates or more favourable terms, it may be a great time to consider a remortgage. Additionally, you can release equity tied up in your property to fund home improvements, investments, or other significant expenses.

Benefits of Remortgaging

Whether you’re looking to save money, access funds, or consolidate debts, understanding the perks of remortgaging will empower you to make informed decisions about your home’s financial future.

Reduce Monthly Repayments: One of the primary reasons homeowners consider remortgaging is to secure a better interest rate than their current mortgage. As market conditions fluctuate, so do mortgage rates. If you find that the current interest rates are lower than what you’re paying, remortgaging can allow you to switch to a more favourable rate, reducing your monthly mortgage repayments. Even a slight decrease in interest rates can result in substantial savings over the life of the loan.

Access to Equity: If your property’s value has increased since you purchased it, you may have built up equity in your home. Remortgaging enables you to tap into this equity and access a lump sum of money. This released capital can be used for various purposes, such as home improvements, funding your child’s education, starting a business, or even going on a dream vacation. It’s essential to use this newfound capital wisely, and our expert advisors can help you explore the best options for your specific needs.

Debt Consolidation: Dealing with multiple debts, such as credit cards, personal loans, or store credit, can be overwhelming. High-interest rates on these debts can make it difficult to manage your finances effectively. Remortgaging allows you to consolidate your debts by rolling them into your mortgage. By doing so, you’ll have a single, more manageable monthly payment at a potentially lower interest rate. Debt consolidation through remortgaging can offer both financial relief and better control over your overall debt.

Switching to a Fixed-Rate Mortgage: If your current mortgage has a variable interest rate, you may be exposed to fluctuations in your monthly payments based on changes in the base rate. Remortgaging gives you the option to switch to a fixed-rate mortgage, providing stability and predictability in your monthly repayments. With a fixed-rate mortgage, you’ll know exactly how much you need to budget for each month, making it easier to manage your finances with confidence.

Access to Better Mortgage Features: As the mortgage market evolves, new and improved mortgage features and products become available. Remortgaging gives you the opportunity to take advantage of these features, such as offset accounts, flexible repayment options, or the ability to overpay without penalties. Evaluating and comparing different mortgage products can help you find the most suitable one to meet your current and future needs.

A personal approach to your remortgage

With a Mortgage Experience adviser on your team, you can sit back and relax, safe in the knowledge that we will be doing all the heavy lifting to find you a suitable remortgage with the best rates available. This gives you more time to pack, and well, do the actual physical heavy lifting (should you wish) as you move into and enjoy your new home or the financial benefits of your remortgage.

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Is it Time to Remortgage

The first step in determining whether it’s time to remortgage is to review your current mortgage deal. Take a close look at the interest rate you’re paying, the type of mortgage you have (fixed-rate, variable-rate, etc.), and the remaining term. Compare these details to the current mortgage market rates and available products. If you find that the prevailing rates are significantly lower than what you’re paying or that your current deal no longer meets your needs, it might be an excellent time to explore remortgaging options.

End of a Fixed-Rate Term: If your existing mortgage has a fixed-rate term, it means that your interest rate is locked in for a specific period, typically two, three, five, or more years. Towards the end of this fixed-rate period, your mortgage will usually revert to your lender’s standard variable rate (SVR), which might be higher than the rate you were previously enjoying. To avoid potential rate increases, many homeowners consider remortgaging before the fixed-rate term expires. This way, you can secure a new fixed-rate deal or explore other favourable options available in the market.

Property Value Appreciation: Has your property’s value increased since you purchased it? A rise in your property’s value can be a prime opportunity for remortgaging. With a higher property valuation, you may be eligible for a more favourable loan-to-value (LTV) ratio, which can lead to better interest rates and mortgage deals. Remortgaging in such cases can allow you to access the increased equity in your home and leverage it for various financial goals.

Changes in Personal Financial Circumstances: Life is full of changes, and your financial situation may evolve over time. Whether you’ve experienced a pay rise, received an inheritance, or faced unexpected expenses, these changes can impact your ability to manage your mortgage effectively. If your circumstances have shifted, remortgaging can be a viable option to adjust your mortgage terms to better suit your current financial capacity.

Consolidating Debts: If you find yourself juggling multiple debts with varying interest rates, remortgaging can offer a solution. By consolidating your debts into your mortgage, you can streamline your monthly payments into a single, more manageable amount. This approach can potentially lower your overall interest costs and help you regain control over your finances.

Remortgage FAQs

When can I remortgage?

You can remortgage at any time, however you may have to pay an early repayment fee if you have not reached the end of your fixed rate term. Fixed rate mortgages can last for two, three, five or – in some cases – 10 years. Once that fixed rate ends, you will be placed on your lender’s SVR (standard variable rate), which will often have higher interest rates.

Remortgaging can help you secure better interest rates than those on a SVR.

Is there a bad time to remortgage?

Sometimes, it isn’t financially viable to remortgage. When you work with Mortgage Experience, one of our experienced brokers will look into your circumstances to see if it is worth your time and money. Early repayment charges can cost you several thousand pounds if you choose to switch to another lender. 

Can I remortgage with bad credit?

Using a specialist broker can help you remortgage if your circumstances have changed since you first applied. It is still possible to remortgage if you have a bad credit score, although traditional high street providers may be less likely to consider you. When you work with a specialist remortgage broker – such as Mortgage Experience – we pair you with an experienced specialist who can help you get access to lenders you won’t find elsewhere.

What is LTV, and how does it impact remortgage deals?

LTV (loan-to-value) refers to the size of your mortgage compared to the value of your property.

For example, if your property is worth £200k, and you have £150k remaining on your current mortgage, then your LTV is 75%.

Typically, the lower the LTV the better the deals.

How to remortgage to release equity

When you first took out your mortgage, it would have been based on the value of your home at that time. With house prices in the UK generally increasing over the years, there is a good chance that your property has increased in value.

With house prices on the rise, you will likely have more equity in your home (reflected in the increase in valuation). But, how do you unlock that if you don’t want to sell?

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*Note: Do not enter any symbols, commas or letters. Enter simple numbers only. These figures are only illustrative. All mortgages are subject to the applicant(s) meeting the eligibility of the specific lender. An assessment of your needs will be confirmed before a recommendation can be made.

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