What you need to know to get the best deal when it's time to remortgage

Getting the best rate and terms when it's time to remortgage is important because a mortgage is probably your biggest monthly expense

As the months pass before it's time to remortgage, are you wondering how interest rate increases will impact you or if you can save money for home improvements?

You're not isolated. The trade group UK Finance estimates that in 2025, 11.8 million homeowners with fixed rates will be comparing mortgage offers.

But it doesn't have to be intimidating. This guide explains all you need to know to get the best deal for your situation and guides you through the remortgage process.

Describe the meaning of remortgaging.

Remortgaging is the process of switching mortgages from one lender to another because your current one has ended and you require a new one.

The most common times to fix your rate are every two or five years, as most borrowers will remortgage at that time. Remortgaging every two years can be costly because you may have to pay mortgage and legal fees each time.

In our "should you fix your mortgage" guide, we go into greater detail about fixed rates.

Is it possible to remortgage with the same lender?

Remortgaging with the same lender is possible. It is known as a product switch or transfer.

In as little as fifteen minutes, you are choosing a new rate to switch to from your existing lender's range.

No additional credit or income checks are required of borrowers. However, you will not be given any useful mortgage advice.

The great majority of homeowners transfer their products and remain with their current lender instead of moving to a different bank or building society, according to Aaron Strutt, director of product and communications at mortgage brokerage Trinity Financial.

The market for product transfers is so popular with borrowers that UK Finance predicts its value will reach a staggering 254 billion this year, far exceeding the standard remortgage market, which is expected to reach 76 billion in 2025.

However, Mr. Strutt stated that "borrowers who choose a product transfer do not always have access to the most competitively priced deals, early repayment charge-free products, and specialist mortgages like offset deals." "They must submit a complete application before they can remove parties from the mortgage or extend the mortgage term.

Causes of remortgaging.

The following are the primary causes of remortgaging.

When your current mortgage agreement expires, changing to a new rate. making money to upgrade the house. To pay off other debts, like credit cards and personal loans, they should increase the size of their mortgage. adding or removing a mortgage holder.

The operation of mortgages.

The seven steps to a remortgage are as follows.

Step 1: Recognize the value of your loan.

How much of your home's value is mortgage debt and how much you own is shown by your loan to value ratio. Your rate will be lower the lower your loan to value is.

To determine your loan to value ratio, divide your mortgage balance by the value of your home, which you can determine using free resources on Rightmove or Zoopla. For instance, if your property is worth 280,000 and your mortgage balance is 224,000, your loan to value ratio is 80%.

Step 2: Look for the best mortgage offer.

Examine the rates that each lender in your loan to value range is offering.

Affinity Financial's senior partner for mortgages and protection, Rhys Young, stated: "See what options your current lender offers, but don't assume it has the best rates.

It's a good idea to get some help because there are thousands of mortgage deals available.

Additionally, Mr. Young stated, "Ask your mortgage broker to look across the entire market for you to see if any other bank can beat your lenders deal."

Choose whether you wish to modify the conditions of your mortgage in step three.

"Keep in mind that during the remortgage process, you might be able to borrow more money, pay off a lump sum, or shorten or lengthen your mortgage term," Mr. Young said.

Have a mortgage broker or your bank's mortgage adviser review your options. If you are simply switching agreements with your current lender, you are unable to do any of these things.

Step 4: Complete the application.

Fill out a fresh mortgage application form with all of your information and provide proof of identity and income. You must successfully complete the lender's affordability and credit checks.

Property valuation is the fifth step.

Not every person who remortgages requires a valuation.

Some lenders are content to use a computer-generated valuation instead of having a surveyor visit your house.

Step 6: Give a lawyer instructions.

When remortgaging to a new lender, borrowers will require the services of a solicitor.

In many cases, lenders will offer to cover your legal fees if you choose their preferred solicitor. Expect it to take longer than hiring your own attorney.

Pay off your previous mortgage in step seven.

Enough funds will be transferred from your new lender to your previous lender to settle the balance of your mortgage. Any money that remains after you have increased the size of your mortgage is paid to you.

How much time does it take to get a new mortgage?

The average remortgage can be finished in four weeks, but if you're taking advantage of your lender's free legal work, expect it to take longer. It may take up to six weeks in this instance.

Answer the conveyancer's questions completely and promptly to avoid slowing down the process, and when requested, provide accurate, up-to-date documentation.

How quickly is it possible to remortgage?

Up to six months before your current mortgage rate expires, you can start the remortgage process.

In order to reserve their rate until they can switch deals without being penalized, most lenders will let new borrowers finish the remortgage application and legal work beforehand.

This will allow borrowers to move between deals with ease.

What occurs if you don't refinance?

Your lender's Standard Variable Rate, which may be more than three times the cost of your prior rate, will be applied if you don't remortgage before the end of the mortgage agreement.

A borrower who fixed their rate for five years in 2020 and had about 40% equity in their home, for instance, would have probably been offered an interest rate of about 2%. Their rate reverts to their lender's SVR when that rate expires in 2025, unless they have arranged a remortgage. As of February 2025, Moneyfacts reports that the average SVR is 778 percent. However, they could lock into a rate of roughly 4 to 4 percent by remortgaging.

If you remortgage early, what would happen?

You may be subject to an early repayment penalty from your lender if you remortgage before the current mortgage agreement expires. This rule usually doesn't apply to tracker mortgages. Usually, there are no penalties.

Mr. Strutt says that different lenders have different fee structures.

Consider the 3.99 percent five-year fix that Barclays recently made available. "Until June 30, 2030, there will be a 4% early repayment adjustment. That would be an 12,000 penalty in year five on a £300,000 mortgage. He stated, "I am fairly certain that instead of giving this money to a bank, people could think of better ways to spend it."

Santander, on the other hand, has previously provided a five-year fixed rate of 3 percent with an early repayment fee that decreases over the course of the five years. This meant that in the last year, it had dropped to 1%, or 3,000 on a £300,000 mortgage.

Does your credit score change when you remortgage?

Whether the lender performs a hard or soft credit check will determine this. A soft credit check won't leave any tracealso known as a footprinton your credit report. It will show up on your credit history as a hard credit check.

Ask the lender what kind of search they will do if you are looking for a mortgage.

Because it suggests that you may be experiencing financial difficulties, having several searches appear on your credit reportespecially if you are deniedcan lower your credit score.

Considerations for remortgaging.

Here are four factors to think about when remortgaging.

How much does your current lender offer in comparison to other building societies and banks? If you require any guidance regarding raising funds or modifying the conditions of your mortgage. If you are changing deals with the same lender, you will not be given advice. If you want financial stability, you should choose a fixed rate for two, three, five, or even more years. Keep in mind that it costs money to cancel your mortgage early. After taking out the mortgage, have your income or credit situation changed? Borrowers who rate switch with their current lender do not have to submit to new credit and income checks.