Ready to start with your remortgage? Here we explain how remortgaging works, the best time to remortgage, and the steps to get started.
Securing your remortgage can be a great way to save money on your monthly mortgage payments, access better rates, or even raise equity from your property to fund home improvements.
You may be wondering whether now is the right time to remortgage or what the process involves. Here, we cover everything you need to know to feel confident in your remortgage.
How does a remortgage work?
Remortgaging means switching your existing mortgage to a new rate with a new lender. This often allows you to access better rate pricing (if mortgage rates have come down since you secured your current mortgage) and therefore reduce your monthly repayments.
A remortgage is different to a Product Transfer. With a remortgage, you move to a new lender, whereas a product transfer allows you to secure a new rate from your current lender. There are benefits and drawbacks to both; however, a remortgage enables you to search the whole market for the most competitive deal available.
When is the best time to remortgage?
The best time to remortgage is when your current deal is about to end. If your current mortgage is a fixed rate, which typically lasts 2 or 5 years, then you will have a set ‘end’ date for that mortgage product.
We typically advise you to start searching for your remortgage deal 3-6 months before your fixed-rate ends. Many lenders will allow you to secure a rate, but switch to a more competitive deal if one becomes available before you complete. This lets you hedge your bets; if rates go down, you can access the better pricing, if they go up, you’ve secured a competitive deal just in time.
If you don’t remortgage in time with that rate ending, then you ‘revert’, or move onto, your lender’s Standard Variable Rate (SVR). This is typically higher than the current rates available, so it’s crucial to remortgage in time.
If interest rates have dropped significantly, it may be cost-effective to remortgage early. However, by remortgaging early, you may incur early repayment charges (ERCs), which are fees you can pay for leaving a mortgage before its end date. In this scenario, our team of brokers can help you cost up whether this is the right decision for you.
What costs are involved in remortgaging?
While you can save in the long run by remortgaging, there are some upfront costs to consider:
- ERCs: If your current rate is far from ending, these charges may apply
- Lender arrangement fees for your new mortgage
- Valuation and legal fees
How do I find the best remortgage deal?
That’s where we come in. With our whole-of-market access, we’ll search all available mortgage options to find you the best rate to suit your needs at the most cost-effective pricing to try and help you save on your mortgage payments.
You can search current available mortgage rate options with our free online calculator here.
How long does the remortgage process take?
A remortgage can take anywhere from 4 to 8 weeks, depending on the complexity of your application and the lender’s service levels. If valuations take longer or the lender is waiting on additional documents, delays can occur. Therefore, preparing in advance with the help of an expert is key.
What documents do I need to remortgage?
Typically, you’ll need to provide:
• Proof of income - payslips or tax returns dated in the last 2-3 months
• Bank statements - At least 3 months of statements
• Proof of identification – this can be a valid passport or driving license
• Proof of address – such as a utility bill or a council tax statement
• Details of your current mortgage – typically your latest mortgage statement, showing your outstanding balance, interest rate, and any ERCs
• Property information – your new lender may request the property’s title deeds or details of any recent valuations
Missing or incorrect paperwork is one of the leading causes of application delays. Preparing all your documents in advance will save you time and money in the remortgage process. Our brokers will review all your documents before submitting your application to identify any potential issues that your lender may have, allowing us to address them ahead of time.
Can I remortgage with bad credit?
Yes, you can remortgage with bad credit; however, your options may be limited. If you have a low credit score, you may face higher mortgage rate pricing.
Can I remortgage if I have low equity in my home?
Yes. Lenders will assess your credit score, income, and loan-to-value (LTV) ratio before making an offer. If your equity in the property is low, we can help you find a mortgage at an LTV that works for you.
3 common mistakes to avoid when remortgaging:
- Focusing only on the interest rate: The cheapest rate available won’t always be the best deal for you. If a rate is really cheap, it’ll likely come with hefty fees. We’ll compare all the deals available to find you the most cost-effective option
- Delaying your remortgage: As mentioned, if you don’t remortgage in time with your current rate ending, you will revert on to your lender’s SVR. This could mean you see a sharp spike in your monthly repayment costs
- Not checking your credit score: Although you can still get a remortgage with poor credit, it’s important to know what your options are before you apply. Working with our team means we’ll only approach the lenders we know are likely to offer to you, saving you time and money
Should I use a broker to remortgage or go direct?
Whilst you can approach a lender directly to remortgage, it’s not guaranteed to save you money. With our experience and whole-of-market access, we’re best placed to find you the best remortgage rate to suit your needs.
We often have access to limited edition and exclusive rates that you couldn’t access by approaching lenders directly. Many lenders also inform us in advance if they plan to change their rates, so we can help you submit your application on time.
Next steps
To discuss your next steps, call us on 0345 345 6788 or submit an enquiry here.
