How to remortgage your home – and when to do it

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Most homeowners will remortgage their property at least once in their lifetime.

But when it’s your first time going through the remortgaging process, it can feel daunting.

Do you need to wait until the initial period of your current mortgage ends for example, or are you allowed to jump ship if a better deal comes along?

Is it possible to borrow more money when you remortgage? And can you then use that money to buy another property or pay for home improvements?

With that in mind, this guide will walk you through the ins and outs of remortgaging your home – and whether you need to do it at all.

What is remortgaging anyway?

Remortgaging is when you switch your existing mortgage to a new one.

That new mortgage could be with your existing lender, or with a different one.

It will have different rates and terms, and in an ideal world save you money.

Don’t automatically assume you need to remortgage though – there are some circumstances when it’s worth staying put (more below).

Remortgaging

With remortgaging, what you’re effectively doing is taking out a new mortgage to pay off your old one.

Because of this, you can use the opportunity to pay off a big chunk of your mortgage or borrow an even larger amount.

Additional borrowing

Unlike remortgaging, additional borrowing on an existing mortgage is more like taking out a parallel loan.

The rates and terms of your existing mortgage don’t change, and you’ll keep making the same repayments.

Meanwhile, the additional portion you borrow may or may not have the same rates and terms as your existing mortgage.

You’ll make separate repayments towards this parallel loan, but it will go out at the same time as your normal mortgage repayments.

Porting a mortgage

What you’re actually doing when you’re porting a mortgage is taking out a new mortgage for a new property.

You’re paying off the balance of the old mortgage in the process, rather than moving it over.

It’s called porting because you get to keep the same rates and terms as your old mortgage.

Why do people remortgage?

People generally remortgage their home when the initial period on their mortgage comes to an end to avoid moving onto the lender’s standard variable rate (SVR).

The standard variable rate is usually higher, meaning more expensive monthly mortgage payments.

So for example if you have a two-year fixed-rate mortgage, you would want to remortgage when those two years are up.

Doing it after the initial period ends means you won’t be subject to any penalty fees.

However, in some cases you might want to remortgage early. You will incur additional fees, but it might be worth it in some circumstances.

For example, if you’re currently on a mortgage with a high interest rate, you might be tempted by one that’s offering much lower rates.

This might happen when there’s a significant change in the Bank of England Bank Rate, as happened during the pandemic.

You might also want to remortgage early to release some of the equity tied up in your home.

This money can then be used to pay off a loan with a higher interest rate, for home improvements or even to buy a second home.

It’s worth noting here that additional borrowing may not always be possible – your lender may determine that you can’t afford the additional debt, for example.

There may also be restrictions on what you can spend the money on, according to Paul Blaking, mortgage sales manager for Suffolk Building Society.

“You may be asked for evidence (such as builders’ quotes) about how the funds are being spent,” he explained.

“Plus, different mortgage providers will have their own rules about what they will allow a borrower to remortgage for.

“So always check, never assume – otherwise you could be breaking the terms or conditions of your mortgage.”

And finally, you might remortgage early because your circumstances have changed and now you need a different product.

Say you were on an interest-only mortgage and you’ve suddenly been promoted with a big bump in pay – you might want to switch to a repayment mortgage in this case as it could save you interest payments in the long run.

When and why you shouldn’t remortgage

Remortgaging might feel like a right of passage but sometimes it might be a bad thing.

You definitely don’t want to remortgage for example if the costs (more below) are going to outweigh the benefits.

An example of this is when your mortgage debt is already very small, and any interest savings you stand to make are minimal.

You might also want to delay remortgaging if the early repayment charge on your existing mortgage is very high.

If your home has lost some of its value, you would become immediately liable for the difference between what your new mortgage provider is willing to lend you and what you owe on your current mortgage.

And finally, if your circumstances have changed for the worse, like if you’ve just lost your job, you might be offered much worse rates than your current mortgage, if you’re offered anything at all.

When is the best time to remortgage?

As mentioned above, the best time to remortgage is when the initial period on your mortgage comes to an end.

That way, you would avoid having to pay any penalty fees.

But actually, you should start preparing for a remortgage a few months before you want to make the change.

“It’s advisable to start looking for new remortgage deals three to six months before your current deal expires,” says Joseph Lane, founder and director of brokerage firm Mortgage Lane.

“This window allows enough time to explore the market, compare offers, and complete the application process without rushing.” 

If you think you might mortgage with an existing lender, it’s worth checking whether they would be happy to waive any early repayment charges.

Do you need to prepare for a remortgage?

“Preparing for a remortgage requires similar financial scrutiny as your first mortgage,” according to Lane.

“Ensuring your credit score is in good standing is crucial as it affects the interest rates offered to you.”

Basically, having a mortgage doesn’t mean you can start being financially complacent.

Your finances still need to be in good shape when you come to remortgage – otherwise you should reconsider remortgaging.

In terms of the paperwork, you’ll want to review the terms of your current mortgage.

Look out for any early repayment charges or exit fees that could affect the timings of your mortgage.

“Additionally, having your financial documents organised and up-to-date, like income verification and current mortgage statements, can streamline the application process,” says Lane.

Read this: Why your mortgage application got rejected

Are there any pitfalls to look out for?

“You need to leave enough time,” says John Lineham, managing director and mortgage adviser at Flagstone Financial.

“Although six months is a long time, most lenders will require you to use their preferred conveyancers which can sometimes be slow.

“But your mortgage adviser can guide you on that and chase to make sure it goes through in time.”

You should also be aware of the costs of remortgaging.

Aside from any early repayment charges, you may also need to pay for valuation of your property and legal fees associated with the conveyancing process.

Some mortgage products also have arrangement fees, which are typically added to the mortgage balance.

So before you remortgage, double check that any savings you make in interest payments are worth the additional fees.

Should you stick with your current lender?

“It may be easier and cheaper to stay with your existing lender,” says Paul Blaking, mortgage sales manager for Suffolk Building Society.

“For instance, they may potentially offer reduced fees, and you may not need to get a property valuation done. They may also give existing borrowers a slightly better rate.”

However, it can depend on your circumstances so it’s still worth shopping around.

Read this: How to get a good mortgage deal

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