Remortgage
your home

A remortgage is when you replace your current mortgage deal with a new one or raise money against your property when there is no mortgage on it.

You can replace your current deal at any time, but lenders are not normally keen if this happens within 6 months of you buying the property. Still, lenders can consider it, if you bought the property on an auction or with bridging finance or you inherited the property.

When the remortgage process completes, your original mortgage deal ends and the new one starts.

The mortgage part is very similar to the purchasing process.

1. We start by understanding your situation (e.g. income, outgoings, credit history), your plans and the property itself, just like when you are buying a property.
2. Based on the above details, we would look at your options from across the market to find suitable lenders and the best remortgage deal for you.
3. If you accept our recommendation, then we would need documents in support of the mortgage application. This includes proof of ID, proof of income, bank statements and some other documents depending on your case details.
4. The lender would assess the details and documents submitted, a valuer would assess the property value and if everyone agrees that the details are as per the lender’s requirements, then we get a mortgage offer.

The main difference with a purchase mortgage is in the legal process. The solicitor would not collect as much information as they would for a purchase transaction, but they will still check that the property is suitable for the lender from a legal point of view.

When satisfied with the details, the solicitors ask for a settlement statement from the current lender, funds from the new lender, pay off the old lender and then update the Land Registry.

There are of course variations dependent on the individual case details, so if you have any questions, just get in touch with our remortgage advisors, who will be happy to help.

There are a number of circumstances when remortgaging could make financial sense.

Your current mortgage deal ends

• Normally, when your deal ends, your interest rate will revert to the lender’s standard variable rate (SVR). This SVR rate is usually higher than the interest rate you could get when you commit to a deal for a number of years.
• Your situation at the time when your deal ends may not be acceptable for new lenders (e.g. you have recently become self-employed). However, you could still possibly take a new deal from your current lender.

You are on a high interest rate deal

• Interest rates may have reduced since you took out your current mortgage deal, so it may be worth changing deals, even if you have an early repayment charge to pay.

You bought the property for cash or by using bridging finance

• You may have had no choice at the time, but now you would like to release some money from the property or replace the expensive bridging loan.

You inherited the property with or without a mortgage on it

• You would like to raise a mortgage against the property to perhaps settle the old mortgage or to buy out another family member who also inherited a share in the property.

You would like to buy out a co-owner

• You may have your parents, siblings or an ex-partner on the mortgage and the title deed with you. However, things have changed and now you’d like to take on the mortgage by yourself.
• You may also want to borrow extra money in the process, which is possible if you earn enough.
• You could also replace a co-owner by another, for example, you could bring on your partner instead of your parents.

There are some situations when remortgaging may not be the best idea or may not even be feasible. For example:

The savings would be less than the costs of remortgaging

• This could happen when the mortgage amount is so small (typically below about £70k) or the mortgage term is so short (typically less than 15 years) that you wouldn’t save enough by remortgaging onto a lower interest rate.

If you are planning to move home shortly after your current deal ends

• Instead of starting a new deal, then try to port it later, you could just revert to the lender’s standard variable rate until your sale completes and take a new mortgage for the new home.

If the property value has dropped significantly

• You may not be able to remortgage if your property is worth much less than when your current deal started. For example, if you took an 80% mortgage on a Buy to Let property, but now your mortgage is 90% of the property value, you won’t be able to get a new Buy to Let deal.

Your tracker/variable interest rate is lower than anything else on the market

• Some deals are for the entire life of the mortgage. These are often called lifetime tracker or variable deals. In some cases, they are so low that it just doesn’t make sense to remortgage.

The simple answer is yes, but indeed you will have to pay the penalty, which is officially called the early repayment charge (ERC).

Not necessarily. There are various options for you to borrow extra money.

• Further advance – you may be able to get more money from your current lender. In this case, your current mortgage is not affected. Your mortgage balance will increase and the extra money will be on a different deal than your original amount.
• Second charge – this means that you get the extra funds from a different lender in exchange for a second mortgage against your property. Your original mortgage will remain in place.
• Remortgage – if you choose this option, then a new mortgage deal will replace your current one. The new deal could be from your current lender or from another one.

As with any mortgage, your options will depend on your personal situation, the property itself and what the purpose of the borrowing is. For example, most lenders are happy with giving extra funds for home improvements, repaying credit cards/personal loans or to use the money as a deposit on a new property.

Of course, there are lots of terms and conditions attached to each of these options, so speak to our advisors who will find the right solution for you.

If we stick to your current lender, then normally we would have to apply latest by 15th-23th of the month before the new mortgage deal should start. In plain English, if we’d like the new deal to start on 1st September, then we’d have to apply by 15th-23th of August.

Some lenders will accept an application within the last 3-4 months of their current deal period, but the new deal would only start when the current deal ends.

If we change lenders, then the process normally takes 6-8 weeks, so it’s worth applying 2-3 months before the current deal finishes, just to be on the safe side.

The good news is that a lot of remortgage deals come with a free valuation and free solicitor services.

Still, you will likely have an arrangement fee (i.e. product fee) and possibly money transfer fee, if you change lenders.

A broker fee may also be payable along with an admin fee from your lender for paying them off in full.

If you are in a mortgage deal, which has an early repayment charge (ERC), then we will also have to take this cost into account when calculating whether it’s worth remortgaging.

As you can see, the costs will depend on a variety of factors, but we will always give you the details before agreeing on and arranging a new deal.

When you move homes, you may not sell your current home, but decide to keep it and rent it out.

If you have a mortgage on it, you can choose from two options:

• Ask your current lender for a consent to let (CTL) OR
• Remortgage onto a new buy-to-let deal to replace your current residential mortgage

If you opt for the first one, there will likely be an admin fee and your rate may increase. Lenders normally give consent to let for 1 year, which you may be able to extend.

If, on the other hand, you opt for a new buy-to-let mortgage, then you will likely have lender costs for both the remortgage and the new purchase. These could include arrangement fee (i.e. product fee), valuation fee, money transfer fee and you may also have to pay for solicitors.

Don’t forget to ask letting agents how much rent you could get and how much they charge for their letting services.

Based on the rental income, as well as your personal situation, we can search for suitable lenders and mortgage deals. For example, not every lender is permitted to offer Buy to Let mortgages on properties, where the owner used to live.

Finally, although slightly different rules apply in England, Northern Ireland, Wales and Scotland, if you don’t sell your home before or at the same time as buying a new main residence, you’d have to pay 3% more stamp duty. You’ll find further information and handy tools on our Stamp Duty calculator page.

You can remortgage onto a new deal, as long as the lender accepts the Shared Ownership scheme.

The mortgage process is exactly the same as for a normal property if you don’t want to buy an additional share.

If you do, then first you will have to establish the property value in line with the housing association’s requirements. Then you could finance the extra share purchase from savings or from increasing your mortgage.

As part of our Shared Ownership remortgage checks, we consider increasing your share and work out the amounts involved. We then explain the details to you so you can make an informed decision.

Ask us about your options and the costs and we’ll be happy to walk you through the details and arrange the remortgage for you.

You can remortgage onto a new deal, as long as the lender accepts the Help to Buy scheme.

The mortgage process is exactly the same as for a normal property if you don’t want to buy an additional share.

If you do, then first you will have to establish the property value in line with the Help to Buy agent’s requirements. Then you could finance the extra share purchase from savings or from increasing your mortgage.

Most people buy their Help to Buy loan out after the initial 5-year interest-free period ends, but you could buy the Help to Buy share earlier or at a later point as well.

Ask us about your options and the costs and we’ll be happy to walk you through the details and arrange the remortgage for you.

Yes. There are lenders who offer mortgages to those who own a property in the UK but live somewhere abroad.

Some will only be able to help if you have never lived in the subject UK property, while others don’t have this restriction.

Sometimes lenders ask that you work for a multi-national firm abroad or earn an income in certain currencies (e.g. EUR, USD, CHF). These are in addition to the usual requirements about rental income, the property itself or even your UK credit history.

It’s a complex matter and most lenders are not high street banks, but specialist lenders. They don’t normally offer mortgages directly to the public, but operate through whole of market mortgage brokers like us to make sure that customers get the right mortgage deal for their circumstances.

Building insurance

If you buy a house, then building insurance will be mandatory to ensure that in case the structure is damaged (e.g. by fire, flood or movement), the insurance will cover at least the mortgage amount.

Nothing else is compulsory, but of course, it makes sense to cover costly unexpected events.

Contents insurance

Contents insurance can pay for replacing your personal belongings if someone burgles your home, there is fire, you accidentally drop your new flat screen TV…and the list goes on.

Landlord insurance

If you’re remortgaging a buy to let property then you should consider getting landlord insurance. Landlord insurance protects you as a landlord from risks associated with your rental property. It usually includes buildings and contents insurance, but can also include rental-property specific covers such as protection against loss of rent, and tenant default. It can also cover legal fees and compensation for damage or injury to the tenant due to the property.

Life insurance

Life insurance is a one-off payment if you were to die during the mortgage term, so the insurance can settle your mortgage. This would allow your family to stay in the property without worrying about mortgage payments at an already stressful time.

Critical illness cover

Critical illness cover would give you a lump-sum if you had a serious illness like cancer, heart attack or stroke as well as dozens of other conditions. This payment may or may not settle the mortgage, but it can help pay for treatment, let you take time off work while recovering or alter your home, if necessary.

Income protection

Income protection is designed to give you a monthly income for some time in case you can’t work due to an accident or a long term illness. This covers mental health issues as well.

Of course, all the insurances come with terms and conditions, optional features and your medical history can influence your options.

To find the right insurance cover that fits within your budget, speak to our team today. We can compare the whole market, find the most suitable cover and apply on your behalf free of charge.