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What is remortgaging?
Here's the gist
A remortgage is when you get a mortgage with a new lender, to replace your old one.
It’s usually done when your current mortgage deal is coming to an end. But there are times where you might remortgage sooner.
How is remortgaging different to porting or product transfers?
Remortgaging
Remortgaging is when you take out a new mortgage deal with a new lender.
The new lender will pay off your old mortgage and you’ll start a new mortgage agreement.
You’re then responsible for making your monthly repayments to the new provider, under the new mortgage terms.
In summary
New mortgage with a new lender.
Porting
‘Porting’ a mortgage can happen when you’re selling your house and buying a new one.
You take out a new loan, which repays your current mortgage. You then take the same rate and terms with your existing mortgage provider, and apply them to the money you’re borrowing for your new house.
In summary
New house, new mortgage, same rates and terms with existing mortgage provider.
Product transfers
A mortgage product transfer normally happens when your fixed interest rate ends.
You can switch to another deal with new rates and terms with your existing mortgage provider.
In summary
Same house, same mortgage, new rates and terms with existing mortgage provider.
Steps to remortgaging
It’s a fairly simple process and probably less onerous than when you sorted out your first mortgage.
1. Do your research
See what deals and interest rates are available. Check your existing mortgage terms to see when your current deal ends. You may have early repayment charges if you switch before your existing deal ends. You’ll need to allow four to eight weeks to complete a remortgage deal.
2. Work out the costs
Look at your monthly incoming and outgoing payments. It’ll help you see how much you can comfortably repay each month. It may be worth getting independent financial advice to help you get the best deal for your budget and circumstances.
3. Get an Agreement in Principle
An Agreement in Principle gives you an idea of how much you may be able to borrow. Once you’ve decided on the mortgage deal, you can then complete the application form. The lender will check your application, carry out some checks and approve or decline your application.
4. Find a conveyancer
A conveyancer will do the legal work and arrange the transfer of money.
Reasons to remortgage
There are many reasons you might look to remortgage, such as:
- Your current deal is about to end. When this happens, your lender may move you on to the standard variable rate (SVR), which can be more expensive.
- You want to reduce your monthly repayments. Some mortgage deals may offer lower monthly repayments. Remember, this may cost you more in the end.
- Your house value has increased. If your house value has increased, you may be able to get a mortgage deal with a lower interest rate. You could also borrow more money against your homes’ value.
Handy to know
Remember, before deciding to remortgage, check the terms of your current deal. You may be charged an early repayment charge for remortgaging before the end of your existing deal.
You could lose your home if you don’t keep up your mortgage repayments
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