Remortgaging is one of those financial moves that many homeowners eventually consider, yet often later than would have been ideal, frequently defaulting onto a lender’s standard variable rate simply through inaction rather than active choice. Understanding exactly what remortgaging involves, and recognising the right timing, can save meaningful money or provide useful flexibility.
For related reading, see our guides on fixed vs variable rate mortgages and a first-time buyer’s guide to mortgages.
Quick Answer
In short: Remortgaging means switching your existing mortgage to a new deal, either with your current lender or a new one, typically to secure a better interest rate, release equity from your home, or change your mortgage term. The best time to consider remortgaging is usually a few months before your current fixed or discounted deal period ends, avoiding a default move onto a potentially less competitive standard variable rate.
Key Takeaways
- Remortgaging involves switching your mortgage deal, either staying with your current lender or moving to a new one, typically to secure better terms.
- Timing your remortgage a few months before your current deal ends avoids inadvertently moving onto a lender’s standard variable rate.
- Remortgaging can also be used to release equity from your home, for example to fund home improvements or other significant costs.
- Early repayment charges may apply if you remortgage before your current deal’s fixed or discounted period ends.
- Comparing both new deals with your current lender and offers from other lenders ensures you secure the most competitive available option.
What Remortgaging Actually Involves
Remortgaging means replacing your existing mortgage with a new one, either by switching to a new deal with your current lender (sometimes called a “product transfer”) or by moving to an entirely different lender. This process typically involves a new application, though often somewhat simpler than an initial mortgage application if you’re not increasing your borrowing significantly.
When Remortgaging Makes Sense
Your current deal period is ending. This is the most common and often most straightforward reason to remortgage, avoiding a default move onto your lender’s standard variable rate, which is often less competitive than actively chosen deals.
You want to release equity from your home. If your property has increased in value, or you’ve paid down a significant portion of your mortgage, remortgaging can allow you to borrow additional funds against this increased equity, commonly used for home improvements or other significant expenses.
Your circumstances or goals have changed. This might include wanting to switch from an interest-only to a repayment mortgage, adjusting your mortgage term, or consolidating other debts (though this last option requires particularly careful consideration given it converts unsecured debt into secured debt against your home).
Interest rates have changed favourably since your last deal. If wider interest rates have moved in a direction that makes remortgaging genuinely beneficial compared with your current rate, this can provide a meaningful opportunity for savings.
Understanding the Right Timing
Most experts suggest beginning to research and compare remortgage options around three to six months before your current deal period ends, since new deals can often be arranged in advance to take effect precisely when your current deal concludes, avoiding any gap where you’d move onto a standard variable rate.
Setting a calendar reminder well ahead of your deal’s end date helps ensure you don’t miss this optimal window, which can otherwise result in paying more than necessary, even if only for a short period before you eventually switch.
Comparison Table: Reasons to Remortgage
| Reason | What It Typically Involves | Key Consideration |
|---|---|---|
| Deal period ending | Switching to a new deal to avoid standard variable rate | Time this a few months before your current deal ends |
| Releasing equity | Borrowing additional funds against increased home value | Consider genuine need vs increasing overall mortgage debt |
| Changing mortgage type | E.g., interest-only to repayment | Understand implications for monthly payment and total cost |
| Securing a better rate | Switching due to favourable rate changes | Compare against any early repayment charges on your current deal |
Product Transfer vs Full Remortgage
A product transfer involves switching to a new deal with your existing lender, often a simpler process since it doesn’t require a full new application or additional legal work in many cases.
A full remortgage involves switching to a different lender entirely, which may offer a more competitive rate but typically involves a more thorough application process, similar to an initial mortgage application, including potentially legal and valuation costs.
Comparing both options, staying with your current lender versus switching, ensures you secure the most genuinely competitive available deal rather than defaulting to whichever option seems simplest.
Considering Early Repayment Charges
If you’re considering remortgaging before your current deal’s fixed or discounted period ends, checking for any early repayment charges is essential, since these can sometimes outweigh the potential savings from switching, depending on the specific figures involved.
Step-by-Step: Approaching a Remortgage
Step 1: Note your current deal’s end date well in advance.
Set a reminder for approximately three to six months before this date to begin your remortgage research.
Step 2: Check your current mortgage balance and property value.
This helps determine your current loan-to-value ratio, which affects the rates you’re likely to be offered.
Step 3: Compare deals from your current lender and other providers.
Look at both product transfer options and full remortgage possibilities to ensure comprehensive comparison.
Step 4: Check for any early repayment charges if switching before your deal ends.
Factor these into your overall cost comparison if considering remortgaging ahead of your natural deal end date.
Step 5: Consider whether you need to release equity or change your mortgage structure.
If so, discuss these specific goals with potential lenders or a mortgage broker to understand your options.
Step 6: Apply for your chosen new deal in good time before your current deal ends.
This ensures a smooth transition without any gap where you’d move onto a standard variable rate.
Common Mistakes People Make
- Not acting before the current deal period ends. This often results in defaulting onto a lender’s standard variable rate, typically less competitive than an actively chosen new deal.
- Only considering their current lender’s offers. Comparing across the wider market often reveals more competitive options than simply accepting a product transfer without comparison.
- Overlooking early repayment charges when switching mid-deal. These can sometimes outweigh potential savings, making careful calculation important before proceeding.
- Releasing equity without a clear, genuine need. This increases your overall mortgage debt and should be considered carefully, rather than simply because the option is available.
- Not accounting for fees associated with remortgaging. Arrangement fees, valuation costs, and potentially legal fees should factor into your genuine cost comparison, not just the headline rate.
Real UK Scenarios
Scenario 1: Ben, remortgaging ahead of his deal ending.
Setting a reminder four months before his fixed-rate deal was due to end, Ben researched and compared options in good time, securing a new competitive deal that took effect immediately as his previous one concluded, avoiding any period on the standard variable rate.
Scenario 2: Priya, releasing equity for home improvements.
With her property value having increased significantly and a genuine need for funds for a substantial home renovation, Priya remortgaged to release equity, carefully comparing this against alternative financing options before proceeding.
Scenario 3: Marcus, comparing product transfer against a full remortgage.
Rather than automatically accepting his current lender’s product transfer offer, Marcus compared this against options from other lenders, ultimately finding a more competitive full remortgage deal elsewhere that justified the slightly more involved application process.
Expert Tips
- Set a reminder three to six months before your current deal period ends, to research and arrange your remortgage in good time.
- Compare both product transfer options with your current lender and full remortgage possibilities with other providers.
- Check for early repayment charges carefully if considering remortgaging before your current deal naturally ends.
- Consider whether releasing equity represents a genuine need, rather than simply an available option, given this increases your overall mortgage debt.
- Factor in all associated fees, arrangement, valuation, potentially legal, when comparing the genuine total cost of remortgaging options.
Pros and Cons of Remortgaging
Pros:
– Can secure a more competitive rate than a lender’s standard variable rate
– Allows releasing equity for genuine needs like home improvements
– Provides opportunity to adjust mortgage structure or term as circumstances change
– Product transfers can offer a simpler process than a full new application
Cons:
– Early repayment charges may apply if switching before your current deal ends
– Releasing equity increases your overall mortgage debt
– Full remortgages involve a more thorough application process, similar to an initial mortgage
– Associated fees should be factored into genuine cost comparison
Frequently Asked Questions
What is remortgaging?
It’s the process of switching your existing mortgage to a new deal, either with your current lender or a different one, typically to secure better terms, release equity, or adjust your mortgage structure.
When is the best time to remortgage?
Generally, around three to six months before your current deal period ends, allowing time to research and arrange a new deal that takes effect precisely when your current one concludes.
What happens if I don’t remortgage when my deal ends?
You’ll typically move onto your lender’s standard variable rate, which is often less competitive than an actively chosen new deal, potentially costing more than necessary.
Can I remortgage to release equity from my home?
Yes, if your property has increased in value or you’ve paid down a significant portion of your mortgage, you can potentially remortgage to borrow additional funds against this equity.
What’s the difference between a product transfer and a full remortgage?
A product transfer involves switching to a new deal with your existing lender, often simpler, while a full remortgage involves switching to a different lender, potentially more competitive but requiring a more thorough application.
Are there fees involved in remortgaging?
Often yes, including arrangement fees, valuation costs, and potentially legal fees, all of which should factor into your genuine cost comparison when considering remortgaging.
What are early repayment charges?
These are fees some lenders charge if you switch away from your current deal before its fixed or discounted period ends, which should be checked carefully if considering remortgaging ahead of schedule.
Should I stay with my current lender or switch when remortgaging?
This depends on comparing the specific offers available; while a product transfer with your current lender is often simpler, comparing against the wider market ensures you don’t miss a more competitive option elsewhere.
Is it a good idea to remortgage to consolidate other debts?
This requires careful consideration, since it converts previously unsecured debt into secured debt against your home, a genuinely significant change in risk that warrants thorough calculation and consideration.
How often can I remortgage?
There’s no strict limit, though most people remortgage when their current deal period ends, roughly every two to five years, depending on their specific deal length, though remortgaging more frequently is possible if genuinely beneficial.
Conclusion
Remortgaging offers a genuine opportunity to secure better mortgage terms, release equity for specific needs, or adjust your mortgage structure as your circumstances change. The most common mistake is simply not acting before your current deal period ends, resulting in an unnecessary move onto a lender’s standard variable rate purely through inaction.
Setting a reminder well in advance, comparing options both with your current lender and across the wider market, and understanding any associated fees or early repayment charges ensures you approach remortgaging as a genuine, informed choice rather than something that happens to you by default.
This article is for educational purposes and should not be considered financial advice.
