The Ultimate Guide to Remortgaging

If you own a property - whether that’s outright or with a mortgage on it - there may come a time when you need to remortgage or raise capital against it. In this comprehensive guide, we will explain what the process involves, what kind of rates and deals you should expect, and how to refinance the right way.

What is a remortgage and how do they work?

Remortgaging either refers to moving your existing mortgage from one lender to another, or renewing a mortgage with your current lender. The latter scenario is commonly referred to as a product transfer, and can be more straightforward than moving to a new mortgage provider.

Sticking with your existing lender might, however, mean missing out on a better deal that could be on offer elsewhere, as you would be limiting yourself to just one line of products.

When you agree to remortgage, you are essentially taking out a new mortgage that replaces the old one by clearing the debt with newly-borrowed funds. But your remortgage doesn’t need to be for the same amount, as it’s possible to borrow more - if you have enough equity built up - or pay a lump sum off the mortgage when you refinance to reduce the term.

Why homeowners refinance

People usually refinance their home for one or more of the following reasons:

• Reaching the end of an introductory rates period: If this is the case and you don’t remortgage, you could end up on your lender’s costly standard variable rate (SVR).
• To find a lower interest rate: Even if it isn’t time to renegotiate your mortgage and fix back in, there might be a significantly better rate available elsewhere that you want to switch to. Be sure to factor in any early repayment changes (ERCs) if this is the case.
• Borrow extra: You can borrow extra against your home equity when refinancing, but how much extra you can secure depends on the amount of equity you have.
• Make changes to your mortgage: This might include altering the product type or repayment type, changing the term length or adding/removing someone from the mortgage. Sometimes you can make such changes without going through the full remortgage process, but this will be at your mortgage lender’s discretion.

When can you remortgage?

Most mortgage lenders will allow you to remortgage six months after taking out your original mortgage, but a handful are more flexible than this and may approve it sooner.

It is recommended that you consider finding a new deal at least six months before the introductory period on your current loan expires. Some lenders allow you to lock your interest rate this far in advance, which can help bring peace of mind in periods of market turbulence.

If you are locked into an introductory rate, you can still remortgage, but this often means that early repayment charges will apply, and they should be factored into the overall cost.

What does the process involve?

The remortgage process consists of the following steps:

Calculating your LTV: You can do this by dividing the amount you need to borrow by the value of the property and multiplying the total by 100. Having this percentage to hand will give you an idea of what kind of remortgage deals you qualify for.

Tallying up the cost: It’s important to be aware of all of the costs in advance. Factor in any early repayment charges that might apply, as well as fees, such as the application fee, valuation fee and solicitor costs. Some mortgage lenders might waive one or more of these fees by offering you an inclusive deal with incentives to switch to them.

Compare deals and secure an AiP: You can compare remortgage deals online with Teito for free and it takes just minutes to secure an agreement in principle (AiP) through us. This will give you a clear idea of how much you can borrow and on what terms.

Full application and completion: The next steps in the process are a full application and remortgage completion. Your lender will carry out their checks at this stage, including a credit assessment and valuation. A solicitor or conveyancer should handle the transfer of the mortgage, but some lenders may provide this as part of the service

What interest rates are currently available?

There are a wide range of remortgage rates available on the market. The exact interest rate you qualify for will be determined by the amount of equity you have (the more, the better), the strength of your application and the type of product you choose.

How to compare the latest rates and deals

You can compare remortgage rates from more than 90 UK lenders for free - including Halifax, NatWest, Nationwide, Santander and Barclays - or have one of our brokers do it for you, below:

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Tips to help you get the best deal

Here are some tips to bear in mind if you are remortgaging your home:

Don’t wait for your lender to call you: Mortgage lenders usually call customers with expiring introductory rates months in advance to discuss a new deal, but you don’t have to wait for them to call you to start shopping around. Some lenders will allow you to reserve an interest rate six months in advance, so it can pay to start early.

Check your credit reports: You can download your credit reports by accessing a free trial through Checkmyfile. Review your files and flag up any inaccuracies or outdated information as this can boost your credit score and help you qualify for better rates.

Think twice before accepting your existing lender’s offer: The product transfer rate your current lender is offering might well be the best deal for you, but you won’t know that for sure unless you compare it against the competition. Be sure to shop around.

Speak to a mortgage broker: A remortgage broker can open up a much wider range of remortgage deals to you. Through their knowledge, experience and lender contacts, they can boost your chances of landing the best possible rate when you refinance.

Releasing equity when you remortgage

When refinancing, many homeowners have the option to release equity from their property. The exact amount you can release will depend on how much you hold, the reason you are releasing the capital, and the maximum LTV cap your lender imposes on additional borrowing.

The table below displays common reasons for releasing equity and the typical loan-to-value (LTV) cap you might can expect for your remortgage deal:

In addition to these LTV caps, some mortgage providers also place maximum borrowing restrictions on remortgages for releasing equity based on the purpose of the funds. For example, there are providers who won’t let you borrow more than £250k for home renovations.

How our brokers helped a homeowner remortgage to consolidate their debts

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How to calculate your new repayments

You can use our calculator below to work out what your new repayments will be after you have remortgaged. Simply enter the amount you will be borrowing on the new mortgage, factoring in any equity release, enter a term length and interest rate, and the calculator will do the rest.

Can you refinance if you have bad credit?

Yes. It is possible to remortgage your home if you have poor credit, whether the issue was present when you took out your original mortgage, or occurred since then. Whether you are approved will depend on the strength of your application and factors including: 

• The age of the credit problem(s) 
• Their severity
• If there are mitigating circumstances surrounding them

Severe forms of adverse, such as a bankruptcy or a repossession, can make it more difficult to refinance, but may be possible if you hold substantial equity and the issues occurred long ago.

You can read more about bad credit remortgages in our standalone guide.

Refinancing a buy-to-let mortgage

The process for remortgaging a buy-to-let property is exactly the same as it is for a residential home. Most lenders require landlords to have owned the property for six months, but a minority, such as HSBC and NatWest offer day-one remortgages for investment properties.

Rates are generally higher for buy-to-let remortgages compared to residential, starting at roughly one percentage point higher on average, as a general rule of thumb.

Mortgage lenders known to offer buy-to-let remortgages include:

• Godiva
• Landbay
• Barclays
• HSBC
• Virgin Money
• LendInvest

You can compare buy-to-let remortgage rates from these lenders and more for free on Teito, and we have brokers on hand to help you get the best deal - get started here.

Remortgaging in later life

Although most mortgage lenders have a maximum age limit that makes it difficult for some homeowners to refinance beyond the age of 75, other mortgage providers have a higher age cap than this, lending up to age 85 and beyond, under the right circumstances.

Refinancing an existing mortgage may be an option for some in later life, but there are alternatives, specifically tailored to the needs of older homeowners, to consider. They include:

• Lifetime mortgages: If you are planning to remortgage to release equity, a lifetime mortgage could be an alternative. These allow you to access the capital in your property as a loan that does not need to be repaid until you die or go into long-term care. You can take out a lifetime mortgage if you still have a residential mortgage in place, but would need to settle the outstanding debt with the equity you release.
• Retirement interest only (RIO): If you were to switch to a RIO mortgage, you would only have to make interest payments each month and settle the capital debt at the end of the term through the sale of the property, usually after you pass away.

Read more about later-life lending in our guide to mortgages for pensioners.

Property types we can help with

In addition to standard residential and buy-to-let properties, our whole-of-market mortgage brokers can help you remortgage the following property types:

• Commercial properties
• HMOs
• Farm and agricultural
• Shared Ownership
• Non-standard construction homes
• Uninhabitable properties
• Holiday homes
• And more

For the above property types, working with a mortgage broker is highly recommended as they can provide bespoke advice tailored to your individual needs. Many high street banks and building societies might not be able to cater for you, but our brokers have deep working relationships with lenders who specialise in niche and unique types of property.

Why use Teito for your remortgage needs?

You can browse remortgage rates from across the market for free with Teito, and we have mortgage brokers on hand to offer advice and make sure you get the best deal.

Here are just some of the reasons why you should choose us:

• We are 5-star rated on leading review websites
• You could secure an agreement in principle in minutes
• Exclusive rates and deals are available
• Our brokers could help you save time and money

Get started here to compare remortgage deals and take advantage of a free, no-obligation chat with a mortgage broker who specialises in this area.