If you’re wondering what remortgaging is, you’re not alone. With rising interest rates and changing financial circumstances, many UK homeowners are exploring their options.
Simply put, remortgaging means switching your existing mortgage to a new deal—either with your current lender or a different one. It doesn’t involve moving home, but it can unlock better rates, lower monthly payments, or additional funds for life’s next big step.
Why Do People Remortgage?
Understanding what remortgaging is starts with knowing why it’s such a popular option. Here are the most common reasons homeowners choose to remortgage:
1. Avoiding the Standard Variable Rate (SVR)
Most mortgage deals last for a fixed or discounted term. Once that period ends, your mortgage usually defaults to the lender’s standard variable rate, which is often significantly higher. Remortgaging before this happens can help you avoid a spike in your monthly payments.
2. Adjusting to Life Changes
If your circumstances have changed—perhaps you’ve had a baby, changed jobs, or become self-employed—you might need a mortgage that better reflects your new financial situation.
3. Borrowing Against Your Property
A remortgage can allow you to release equity from your home. This can be useful if you’re planning home improvements (like a kitchen extension or loft conversion) or need funds for other major expenses.
How Does Remortgaging Work?
If you’re asking “how does remortgaging work?”, here’s a simple step-by-step breakdown of the process:
Step 1: Do Your Research
Compare remortgage deals from a wide range of lenders—not just your current one. Working with a whole-of-market broker like CMME (part of OneDome) ensures you’re not missing out on better offers.
Step 2: Understand the Costs
Before you switch, factor in potential fees, including:
- Booking/application fees
- Property valuation fees
- Legal (conveyancing) costs
- Early repayment charges (ERCs)
ERCs are often applied if you leave your current mortgage deal before the term ends. These charges are calculated as a percentage of your outstanding loan and can be substantial—so it’s vital to weigh them against your potential savings.
Step 3: Get a Decision in Principle (DIP)
A Decision in Principle gives you an estimate of how much you can borrow. It uses a soft credit check, so it won’t affect your credit score, and gives you clarity before applying.
Step 4: Apply for the Remortgage
Once you’re happy with your DIP and the terms, it’s time to complete the full application. This involves a hard credit check and providing supporting documents such as payslips, bank statements, or tax returns.
Step 5: Legal Work & Property Valuation
Even though you’re not buying a new home, legal work is still needed. Your new lender will also arrange for a valuation of your property to confirm it’s worth the loan amount.
Step 6: Review and Complete
You’ll receive a formal mortgage offer to review. Once accepted, your new lender will repay your old mortgage, and your new deal will begin. Your first payment will be due under the new terms.
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When Is the Best Time to Remortgage?
A good time to start the remortgage process is 3–6 months before your current deal ends. This gives you time to secure a new deal before slipping onto a higher SVR or facing costly early repayment charges.
Tips for a Smooth Remortgaging Experience
- Check your credit score – A better score can unlock lower rates
- Start early – Planning ahead gives you more options
- Get expert advice – A mortgage advisor can save you time, money, and stress
- Here at OneDome, we can help you with every step – get in touch here.
So, What Is Remortgaging Really About?
Ultimately, remortgaging is about staying in control of your finances. It can help you reduce monthly costs, access better interest rates, or unlock cash for other goals. Whether your fixed-rate deal is ending or you’re looking to fund a new project, remortgaging is worth considering.
OneDome is here to help
Choosing a mortgage is complex but OneDome is here to help. If you have any questions about whether to opt for a Fixed or Variable Mortgage, the wider mortgage process or want tailored advice on the different types of mortgages that suit your situation speak to our friendly mortgage advisors today or call us on 01489555080 or explore our comprehensive mortgage guide for a more in-depth breakdown.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage.