Remortgage Process
To remortgage simply means replacing your current mortgage with a new one.
Usually, people remortgage when their current deal is ending. Many mortgages start with a fixed rate for two, three, or five years. Once that deal ends, your lender will move you onto their standard variable rate (SVR), which is usually more expensive.
A remortgage can help you avoid that jump in monthly payments.
Why people remortgage
Considering that most people secure themselves to a fixed term mortgage deal, there comes a time to remortgage - when that ‘current’ fixed term is coming to an end. Rather than allowing the term to elapse and be moved onto that same mortgage lender’s standard variable rate (SVR) the homeowner(s) look to their mortgage adviser to secure a new fixed deal.
So, essentially, people remortgage for one of these reasons:
To get better interest rates and reduce monthly payments
To keep payments predictable by moving onto a new fixed-rate deal
To borrow extra money for things like home improvements, debt consolidation, or other large costs. (Please see our other guide on Debt Consolidation and how that works)
Because their circumstances have changed, for example income, employment, or credit history
How the remortgage process works
Check when your current deal ends
This is the first thing to look at – (if you have a mortgage adviser this will be part of their process and they will reach out to you and begin sourcing a new deal on your behalf.) If you do not have a mortgage adviser – contact us here at Môr Mortgages for an initial chat and we can advise you accordingly.
If you remortgage too early, you may have to pay an early repayment charge.
Your current lender can tell you when your deal ends and whether any charges apply and in many cases they themselves will make contact with you and offer a new fixed deal. IMPORTANT point though – that lender is only offering you a deal from within their own organisation. It might be cheaper than your ‘current’ deal that is nearly ending however it might not even be in the top 50 mortgages available to you across the whole market.
Work out what you need
Think about what matters most.
For example:
Do you want the lowest monthly payment?
Do you want the security of a fixed rate?
Do you need to borrow extra money?
As part of the mortgage review with us here at Môr Mortgages we would discuss all the above and more to ensure the advice was tailored for your exact situation and needs.
Compare mortgage options
This is where many people get stuck.
Not every mortgage is suitable for every borrower. The cheapest rate on paper is not always the cheapest overall once fees, incentives, and lender criteria are considered. This is the part where your mortgage adviser’s knowledge and access to the whole UK mortgage market makes a huge difference.
Apply for the new mortgage
The lender will usually check:
your income
your credit history
your property value
your existing mortgage balance
Sometimes the lender uses an automated valuation. Sometimes they arrange surveyors to attend your property and value the property on their behalf.
The new mortgage replaces the old one
On completion day, the new lender pays off the old mortgage.
How a mortgage adviser can help
A remortgage can look simple, but there are often details that make a big difference and those details can cost you long term money.
A mortgage adviser can help by:
Finding specific deals
An adviser knows the market and has access to all of it. They will compare and analyse based on the case specifics and needs of the client(s).
Checking lender criteria
Every lender has different rules.
One lender may accept overtime, bonus income, self-employed income, or recent credit blips. Another may not.
This matters because applying to the wrong lender can waste time and you might also be missing out on the best deal for yourselves.
Explaining the real cost
A deal with a low rate may still cost more overall if it comes with high fees.
An adviser can show you the true monthly cost and total cost.
Handling the application
A mortgage adviser can deal with:
the lead up to the fixed deal ending
paperwork
document management
lender communication
chasing progress
helping avoid delays
sourcing and liasion with conveyancers, surveyors - if and when necessary
That means less stress and less time spent trying to work out what the lender is asking for.
When should you start looking?
A good rule of thumb is to start looking at remortgage options around three to six months before your current deal ends.
That gives you time to compare deals properly and often lets you secure a new rate in advance.
As mentioned earlier in the piece – your mortgage adviser will have all of these key dates and reminders, and act on them, as part of their role.
In simple terms
Remortgaging means moving your mortgage onto a new deal.
People usually do it to avoid paying more than they need to once their current mortgage deal ends.
A mortgage adviser helps by:
comparing lenders
checking which deals you qualify for
explaining costs clearly
handling the paperwork from start to finish
For many homeowners, that can save both money and hassle.
Please also see our Frequently Asked Questions section within this website. Specifically our section on Remortgages.
Ian Parsons
Director
Môr Mortgages
07903 072064
Remortgaging
From the outset, Môr Mortgages mission statement was always to provide the most transparent and trustworthy advice and guidance. Occasionally, that means getting down to basics and yet it is within these basic areas of the mortgage world that homeowners have blindspots.
The remortgage process is one of those basic elements and it can still trip homeowners up. For this purpose, here is a basic guide as to what the remortgage process is, why and when it happens and how it all plays out.