Remortgaging means taking out a new mortgage to replace your current one. The most common reason people do this is to save money, especially if their current deal has ended and they’re now paying their lender’s often pricey Standard Variable Rate (SVR).
But saving money isn’t the only reason to remortgage, there are plenty of others that might be worth considering.
It’s also important to know that switching lenders isn’t your only option. Sometimes, your existing lender can offer you a new deal, called a product transfer, which might be simpler and quicker.
Why Remortgage?
Your mortgage is probably the biggest financial commitment you’ll ever make. So it makes sense to keep it working as hard for you as possible. A smarter mortgage can mean hundreds or even thousands saved each year.
If you’re used to shopping around for the best deals on everything from phones to holidays, it’s time to apply those same skills to your mortgage.
But remortgaging isn’t a one-size-fits-all solution. There are good reasons to remortgage, and times when it might not be right for you.
When Should You Consider Remortgaging?
Your current deal is coming to an end
Most mortgage deals last between two and five years. When yours finishes, your lender will usually move you to their Standard Variable Rate. This rate is typically higher than your previous deal and the best current offers. SVRs can be anywhere between 6.5% and 7.5%, which could mean a much bigger monthly payment.
To avoid this, it’s best to start exploring new deals around six months before your current mortgage deal ends.
You want a better rate
If you’re still in the middle of a deal but rates have dropped, it might be worth switching. However, early repayment charges (ERCs) can apply if you leave a deal early, these can be quite substantial, sometimes 2-5% of the outstanding balance.
Before you switch, it’s important to do the maths. Sometimes paying an ERC and moving to a better rate can still save you money overall.
Your property value has increased
If your home’s value has gone up significantly, your loan-to-value ratio might have dropped, making you eligible for better interest rates. This could mean cheaper monthly payments.
You’re worried about rates rising
If you’re on a variable mortgage, rises in the Bank of England base rate could increase your monthly payments. Fixing your rate now might offer peace of mind.
You want to pay off your mortgage faster
Most lenders limit how much you can overpay each year without penalty — usually around 10%. Remortgaging could allow you to make larger overpayments without fees, helping you pay off your mortgage sooner.
You need to borrow more
If you want to borrow additional funds for home improvements or to clear debts, remortgaging with a new lender might offer better rates than other borrowing options. Just be ready to provide evidence of how you plan to use the money.
You want more flexibility
Maybe you want the option to take payment holidays or link savings accounts to your mortgage. Flexible mortgages can offer this, but often at a slightly higher interest rate.
When Might Remortgaging Not Be the Best Idea?
Your mortgage balance is small
If you owe less than around £50,000, fees might outweigh the savings from switching deals. In these cases, it may be better to stick with your current deal or look for a no-fee mortgage.
You face high early repayment charges
If the ERC is large, remortgaging could cost you more than it saves. But you might be able to do a product transfer with your current lender for a lower fee.
Your financial situation has changed
If you’ve changed jobs, gone self-employed, or your income has dropped, lenders might be stricter. This can make remortgaging more difficult.
Your property value has dropped
If your home is worth less than when you bought it, you might be in negative equity, making it harder to find a better mortgage deal.
You have little equity left
Borrowing more than 90% of your property’s value can limit your options for better rates.
You’ve had credit issues
Lenders want to see a good credit history. Even a missed payment could affect your chances of remortgaging.
You’re already on a great deal
If you’re happy with your current rate and deal, there’s no rush to switch. But keep an eye on the market for when your deal ends.
Speak to Mortgage Matters
Remortgaging can be a great way to save money or get a deal better suited to your needs, but it’s not for everyone. The key is knowing when to act, understanding the costs involved, and seeking remortgaging advice if you’re unsure.
If your mortgage deal is coming to an end or you want to explore your options, speak to a trusted mortgage advisor. They can help you weigh up the pros and cons, find the right deal for your circumstances, and guide you through the process smoothly.
Read more:
What Is Remortgaging and Why Does It Matter?