What Is a Remortgage and When Might You Consider One?

A remortgage usually means moving your mortgage to a new lender, which pays off your existing mortgage. You then make payments to the new lender instead.

Switching to a new rate with your current lender is called a product transfer. It is often discussed alongside remortgaging, and some of the same points apply, but it is simpler: there is usually no legal work, often no new valuation, and nothing to pay off.

A remortgage is different from buying a home. Because you are not buying a property, Stamp Duty Land Tax (England and Northern Ireland), Land Transaction Tax (Wales) or Land and Buildings Transaction Tax (Scotland) does not normally apply to a straightforward remortgage. If you are also adding or removing someone from the mortgage, ask your conveyancer or solicitor whether tax could apply, and check the current rules for your nation.

People remortgage for different reasons. Some common ones are:

• Your deal is ending. Many mortgages start with an introductory period, such as a fixed or discounted rate. When it ends, the lender usually moves you onto its standard variable rate (SVR), which can be higher and can change over time.
• Your circumstances have changed. Your income, household or plans may be different from when you took the mortgage out. For example, a higher income might let you shorten the term, or a change in the household might mean you want lower monthly payments or to add or remove a borrower.
• You want to borrow more. Some borrowers raise extra funds for home improvements or other plans. This increases the amount you owe and the interest you pay overall.
• Your home has changed in value. This can affect the loan-to-value (LTV), which is the size of your mortgage compared with your property's value. Lenders often price deals by LTV.
• You want a different type of deal. For example, some borrowers prefer the certainty of a fixed rate, where the interest rate stays the same for a set period. Others prefer a tracker, where the rate moves in line with the Bank of England base rate, or a more flexible product.

None of these reasons means a remortgage is right for everyone. An adviser can talk through your own situation.

A remortgage can bring benefits, but it also has costs. Look at both before you go further.

Possible benefits

• A different interest rate or payment pattern, which may suit your budget better.
• The chance to change your mortgage term or how much you owe.
• Payments that are more predictable, if you choose a fixed rate.

Possible costs and risks

• Early repayment charges (ERCs). If you leave your current deal before it ends, you may have to pay a charge.
• Fees. These can include arrangement, valuation and legal fees, depending on the deal. Some lenders let you add the arrangement fee to the loan rather than paying it upfront, but you then pay interest on it for the life of the mortgage.
• Fixed rates can limit flexibility. If rates fall, you may be unable to benefit without paying an ERC.
• Borrowing more or for longer. This can mean paying more interest over the life of the mortgage.
• Affordability checks. A new lender will reassess whether the mortgage is affordable at the time you apply. If your income has fallen or your outgoings have risen since you took out your current mortgage, you may not qualify for the deal you want. (A product transfer with your existing lender may involve fewer checks.)

Rates and fees change often. Check the date shown next to any figures on the rates page so you know how current they are, and use the tools on this site to help you estimate payments.

The order below is typical in the UK. Details vary between lenders and between England, Wales, Scotland and Northern Ireland.

If you take a product transfer with your current lender, the legal work and completion steps below usually do not apply, and there is often no new valuation.

1. Check your current mortgage. Find out when your deal ends, how much you still owe, and whether an ERC applies.
2. Speak to a mortgage adviser. An adviser looks at your income, the equity you have in your home (its value minus what you owe) and your goals. They explain the types of mortgage, the costs and the risks, and help you understand your options and what a lender will ask for. You can request a callback to be introduced to a mortgage adviser.
3. Agree your budget and priorities. Decide what monthly payment you can manage and what matters most to you, such as payment certainty or flexibility.
4. Choose a deal. With your adviser, compare suitable deals on rate, fees and flexibility.
5. Gather your documents. Lenders typically ask for proof of identity, proof of income, bank statements and details of your current mortgage.
6. Make the application. A mortgage adviser can help you prepare the application and documents. The lender then carries out its checks, which usually include a valuation of your property.
7. Mortgage offer. If the lender is satisfied with its checks and the valuation, it issues a formal offer setting out the terms.
8. Legal work. When you move to a new lender, a conveyancer or solicitor usually handles the legal work of moving the mortgage.
9. Completion. When you move to a new lender, your new mortgage pays off the old one, and your payments follow the new terms.

Allow time for these steps. Many lenders let you secure a new deal some months before your current one ends, and some borrowers start looking some months ahead so they can compare options calmly. Check your own mortgage terms.

Your home may be repossessed if you do not keep up repayments on your mortgage.

This article is general information only and is not personal advice. Your circumstances, the lender you choose and the product you take will affect what is right for you, so speak to a qualified mortgage adviser before making a decision.

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