What is a Remortgage and How Does it Work??
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Short answer: what is a remortgage?
A remortgage is when you replace your current mortgage with a new one on the same property, without moving home. The new mortgage pays off the old one, and you then repay the new lender, usually on a new interest rate, term or loan amount. People remortgage to get a better rate when their deal ends, to borrow more for things like home improvements, or to change how their mortgage is set up.
Key takeaways
- A remortgage replaces your current mortgage with a new one on the same home, usually with a new lender.
- Most people remortgage when their deal ends, to avoid the lender’s standard variable rate.
- You can usually secure a new rate up to six months before your deal ends.
- Remortgaging to a new lender typically takes four to eight weeks; a product transfer can take days.
- Your equity acts as your deposit, and a lower loan to value usually means more deals to choose from.
I’m Anthony McQuilliam from Bolt Mortgages. Remortgaging is one of the most common things I help people with, and it’s also one of the most misunderstood. Plenty of homeowners assume it’s complicated, expensive or only for people who want to borrow more. For most people it’s none of those things. It’s simply making sure your mortgage is on the right deal for where you are now.
So, what is a remortgage in practice, and is it right for you? This guide explains exactly what remortgaging means, how the process works from start to finish, what it costs, and how to tell whether it’s right for you.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
What does it mean to remortgage your house? Remortgaging explained
To remortgage your house means taking out a new mortgage on a property you already own, to replace the one you have. Nothing changes about the house itself or who lives in it. What changes is the deal behind it: the lender, the interest rate, the monthly payment, the term, or the amount you owe.
You’ll sometimes hear “remortgage” used loosely to mean any change to a mortgage. Strictly speaking, it means moving to a new lender. Switching to a new deal with the lender you already have is called a product transfer, and borrowing more from your current lender is a further advance. All three are covered below, because the right one depends on your situation.
| Remortgage | Product transfer | Further advance | |
|---|---|---|---|
| Who with | A new lender | Your current lender | Your current lender |
| What changes | Lender, rate, and can change amount and term | Rate, usually on the same balance | Extra borrowing added alongside your current deal |
| Choice of deals | Wide range of lenders | Your lender’s deals only | Your lender’s deals only |
| Solicitor | Yes, or a lender’s free legal service | Usually not | Usually not |
| Valuation | Yes | Usually not | Often |
| Typical timescale | 4–8 weeks | Can be days | A few weeks |
How does remortgaging work?
When you remortgage to a new lender, three things happen at completion:
- Your new lender releases the funds to a solicitor or conveyancer.
- Your old mortgage is paid off in full, along with any early repayment charge if you leave before your deal ends.
- The new mortgage is registered against your home with the Land Registry, and your payments go to the new lender from then on.
If you borrow more than you owe, the extra is paid to you once the old mortgage has been cleared. If you borrow the same amount, you simply swap one mortgage for another, ideally on a better deal.
Your home is used as security for the new mortgage in exactly the same way as before. That’s why the lender will check your affordability and the value of your property before agreeing to lend.
Why do people remortgage?
There are six common reasons, and many people have more than one.
Their deal is ending
When a fixed or tracker deal ends, most mortgages move onto the lender’s standard variable rate, which is usually higher.
To get a better rate
If rates have fallen, or your property has gone up in value, you may qualify for a cheaper deal.
To borrow more
Releasing equity for home improvements, an extension or another major expense.
To change the term
Shortening the term to be mortgage-free sooner, or extending it to lower monthly payments.
To change the structure
Moving from interest-only to repayment, or to a deal with more flexible overpayments.
To change who’s on it
Adding a partner, or removing someone after a separation, often alongside a transfer of equity.
Buy to let? Landlords remortgage for many of the same reasons. See our buy to let remortgage guide.
When can you remortgage?
You can remortgage at any time, but when you do it makes a big difference to the cost.
- Near the end of your deal: this is the ideal time. Many lenders let you secure a new rate up to six months before your current deal ends, so you can move across on the day it finishes with no early repayment charge.
- After your deal has ended: you can remortgage at any point, usually without a charge. Until you do, you’ll typically be paying your lender’s standard variable rate.
- Part-way through a deal: possible, but you’ll usually pay an early repayment charge. Our guide Can you remortgage in a fixed term? shows how to work out whether it’s worth it.
Is remortgaging a good idea? The pros and cons
For most homeowners coming to the end of a deal, remortgaging is worth looking at. Whether it’s the right move depends on your rate, your fees and what you want to achieve.
Advantages
- Avoid the standard variable rate when your current deal ends.
- Access a wider choice of deals than your current lender alone can offer.
- Borrow more for home improvements or other plans, subject to affordability.
- Change your term or repayment type to suit your circumstances now.
Things to weigh up
- Fees can cancel out a small rate saving, so compare the total cost.
- Early repayment charges apply if you leave a deal before it ends.
- Borrowing more or extending the term can increase the total interest you pay.
- A full application means affordability and credit checks, which a product transfer usually avoids.
How much can I borrow when I remortgage?
It depends on two limits, and the lower one applies:
- Affordability: lenders look at your income, outgoings and commitments. Many lenders cap borrowing at around four to four-and-a-half times income, with some going higher for certain borrowers.
- Loan to value: the maximum a lender will lend against your home’s value. Many residential lenders go up to 85% to 95% LTV, but the best rates are usually at lower LTVs.
Use the calculator below to see your current LTV and how extra borrowing would change it.
Can I remortgage my house?
Most homeowners can. Lenders mainly look at four things:
- Your equity and loan to value (LTV): how much you owe compared with what your home is worth. The lower your LTV, the more deals you can usually choose from.
- Affordability: your income, outgoings and commitments, checked against the new mortgage.
- Your credit history: missed payments or defaults don’t always rule you out, but they can narrow your choice of lenders.
- The property: its type, condition and, for flats, the length of the lease.
If you’re self-employed, lenders will want to see your accounts or tax calculations. Our guide to remortgaging when self-employed covers this in detail.
Remortgage LTV calculator: how much equity do you have?
Enter your property’s estimated value and what you owe. Add any extra you’d like to borrow to see how it affects your loan to value.
For illustration only. Your lender will confirm the property’s value with its own valuation, and lending is subject to affordability and criteria.
How do you remortgage, step by step?
Here’s how the process works from first conversation to completion.
Check when your deal ends
Your mortgage offer or annual statement shows your deal end date and any early repayment charge. Aim to start around six months before.
Work out your equity
Get a rough idea of your home’s value and your outstanding balance, so you know your loan to value.
Speak to an adviser
An adviser compares new lenders with what your current lender will offer as a product transfer, so you can see every option side by side.
Get an agreement in principle
Many lenders will give an indication of how much they’ll lend before you apply in full.
Apply and send your documents
Usually recent payslips or accounts, three months of bank statements, photo ID and proof of address.
Valuation and mortgage offer
The lender values the property, either with a visit or an automated valuation, then issues your mortgage offer.
Legal work
A solicitor or conveyancer handles paying off the old mortgage and registering the new one. Some lenders include this at no extra cost.
Completion
Your old mortgage is repaid, your new deal starts, and any extra borrowing is released to you.
How long does a remortgage take?
A remortgage to a new lender typically takes four to eight weeks from application to completion. Valuations, legal work and lender processing times all play a part. A product transfer with your current lender can complete in a matter of days. For a wider look at timescales, see how long does a mortgage application take?
How much does it cost to remortgage?
The costs depend on the deal and whether you move lender. The main ones to budget for are:
| Cost | What it is | When it applies |
|---|---|---|
| Arrangement fee | The new lender’s fee for the deal, sometimes added to the loan | Many deals; some have none |
| Valuation fee | The lender’s check on your home’s value | Often included on remortgage deals |
| Legal fees | Paying off the old mortgage and registering the new one; often a few hundred pounds up to around £1,000 | New lender only; some lenders include legal work |
| Early repayment charge | A charge for leaving your current deal early | Only if you leave before your deal ends |
| Exit fee | An administration fee from your current lender for closing the account | Some lenders |
| Adviser fee | For mortgage advice and arranging the deal | Depends on the adviser |
Some deals with no fees have a slightly higher rate, so the cheapest-looking rate isn’t always the cheapest deal overall. Comparing the total cost over the whole deal is the fairest way to judge.
What happens if you don’t remortgage?
Nothing happens straight away. When your deal ends, your mortgage usually moves onto your lender’s standard variable rate (SVR). It’s variable, so the lender can change it, and it’s typically higher than the deals available to new and switching customers.
Staying on the SVR isn’t always wrong. It rarely has early repayment charges, which can suit someone planning to sell or repay soon. For most people, though, moving to a new deal before or when the current one ends keeps monthly payments lower.
Is your deal ending in the next six months?
Now is the time to compare your options. Tell us when your deal ends and we’ll look at what’s available from new lenders and from your current one.
Remortgaging: frequently asked questions
Is a remortgage the same as a new mortgage?
Yes, in that you take out a new mortgage agreement, but it’s on a home you already own rather than one you’re buying. You don’t move, and the new mortgage is used to pay off the old one.
Do you need a deposit to remortgage?
Usually not. When you remortgage, the equity you have in your home does the job of a deposit. The more equity you have, the lower your loan to value and the wider the choice of deals.
Can you remortgage with the same lender?
Yes. Moving to a new deal with your current lender is called a product transfer. It’s often quicker, with no solicitor and no valuation, but you can only choose from that lender’s deals, so it’s worth comparing it with what other lenders offer.
Do I need a solicitor to remortgage?
If you move to a new lender, yes. A solicitor or conveyancer pays off your old mortgage and registers the new one, and some lenders include this legal work at no extra cost. A product transfer with your current lender doesn’t usually need a solicitor.
Does remortgaging affect your credit score?
A full remortgage application involves a credit check that is recorded on your credit file. Some lenders use a soft search for an agreement in principle, which doesn’t show to other lenders. The effect of a single application is usually small and temporary.
Can you remortgage if your house has gone up in value?
Yes. A higher value means more equity and a lower loan to value, which can give you access to lower rates. The lender will use its own valuation to confirm the figure.
Can you remortgage to release equity?
Yes, many people remortgage to borrow more against their home, for example for home improvements. It’s subject to affordability, the lender’s criteria and how much equity you have.
How often can you remortgage?
There’s no legal limit. In practice, most people remortgage when each deal ends, because leaving part-way through usually means paying an early repayment charge.
Is it better to remortgage or do a product transfer?
It depends on the deals available. A product transfer is usually quicker and simpler, while remortgaging to a new lender gives you a wider choice and the option to borrow more. Comparing both side by side is the only way to know which works out cheaper for you.
What documents do you need to remortgage?
Lenders usually ask for recent payslips and your P60 if you’re employed, or accounts or tax calculations if you’re self-employed, plus around three months of bank statements, photo ID, proof of address and your current mortgage details.
Who values my house when I remortgage?
The new lender arranges the valuation, either with a surveyor’s visit or an automated valuation. If it comes back lower than you expected, your loan to value will be higher, which can affect the deals available. An adviser can look at other lenders or adjust the loan amount.
Is remortgaging easier than getting your first mortgage?
Often, yes. You already own the property, have a payment history and usually have more equity than your original deposit. Lenders still check affordability and credit, so it isn’t automatic, and a product transfer with your current lender is usually simpler still.
Can I remortgage with bad credit?
Often, yes. Some lenders will consider people with missed payments, defaults or CCJs, depending on how recent and how serious they are. The choice of lenders is smaller, which is where an adviser can help.
What do our remortgage clients say?
“With this being my first time needing to remortgage my property I was a little overwhelmed at the start of the process. Luckily Jodie who helped me through it all guided me through every step and form needed to be completed. […] Thanks to Jodie remortgaging became a walk in the park!”
“Bolt mortgages made remortgaging our home a piece of cake. The process was smooth and everything was made clear, no questions unanswered.”
“So glad to have found Ant at Bolt! Came for a remortgage and the whole process has been stress free and seamless. Charley has been amazing sorting all the forms out and so efficient in keeping us up to date.”
“Recently used Bolt mortgages to re-mortgage and Joseph was a great help and was able to secure me a product and an offer in a week.”
“Had the pleasure of working with Stephen Price and Christine Weatherall on my remortgage. They have been super helpful throughout, making what can be a tiresome process, easy and stress-free.”
“We have just completed a remortgage process with bolt mortgages. A straight forward well managed process, kept in touch throughout and was quick to respond to any questions. Highly recommended. Thank you to Anthony and Chloe”
How can Bolt Mortgages help with your remortgage?
We compare deals from our panel of lenders alongside what your current lender will offer, then handle the application, paperwork and chasing through to completion.
Down-to-earth advisers
Plain answers, including “stay where you are” when that’s the right call.
A huge panel of lenders
We compare options across our lender panel, not just one bank’s deals.
Every option weighed up
Remortgage, product transfer and further borrowing, side by side.
Designed to save you time
We handle the paperwork and chase the lender and solicitor, so you don’t have to.
Ready to look at your remortgage options?
Speak to an adviser about your current deal and the most suitable option for you.