17th April 2025

How Does Remortgaging Work? Process, Rates & Key Considerations

Remortgaging can be a strategic financial decision for some homeowners, but it's important to understand how the process works and whether it suits your circumstances. Whether you're reviewing your current deal, exploring ways to access equity, or seeking cost-efficiency, this guide will help clarify what remortgaging involves, what factors influence rates, and what you should consider before proceeding.

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1. What is a Remortgage?

A remortgage occurs when you take out a new mortgage on a property you already own, replacing your existing mortgage. You may remortgage with your current lender or switch to a different one.

Common reasons people consider remortgaging include:

• Accessing potentially lower interest rates
• Reducing monthly payments (subject to fees and terms)
• Releasing equity from the property
• Moving from a variable to a fixed-rate mortgage

Please note that remortgaging is not suitable for everyone and may incur additional costs, such as early repayment charges or arrangement fees.

2. How Does Remortgaging Work?

The remortgaging process generally involves the following steps:

1. Reviewing your existing mortgage and goals
2. Checking for early repayment charges or exit fees
3. Comparing available mortgage deals from different lenders
4. Submitting an application
5. Completing legal and valuation procedures

Many borrowers choose to remortgage at the end of a fixed-term period to avoid reverting to their lender's Standard Variable Rate (SVR), which is often higher. However, rates and terms vary and should be assessed carefully.

3. Remortgage Rates in the UK

Remortgage rates depend on several factors, including:

• Loan-to-Value (LTV) ratio
• Mortgage term
• Credit history
• Income and employment stability

Access to lower rates is generally more likely for borrowers with:

• A lower LTV (e.g. 75% or below)
• A strong credit score
• Evidence of stable income

Rates and product availability can change frequently. Seek regulated advice before making a decision.

4. What Happens When You Remortgage?

Upon completion of a remortgage:

• Your previous mortgage is fully repaid
• The new mortgage agreement becomes active
• Monthly repayments are made based on the new terms
• If equity is released, it is transferred to you (subject to lender approval)

The process typically takes 4-8 weeks, though this varies based on individual circumstances.

5. Step-by-Step Remortgage Process

1. Review your current mortgage deal - Check fixed-term end dates and any exit fees
2. Assess your objectives - Are you looking to reduce costs, change mortgage type, or release equity?
3. Check your credit file - Ensure your information is accurate and up to date
4. Compare lenders and products - Consider both your current lender and others
5. Submit an application - Include necessary documentation (e.g. income proof, ID)
6. Property valuation - Conducted by the lender to assess current market value
7. Legal process - Usually managed by a solicitor or conveyancer
8. Completion and repayment - Your old mortgage is paid off and you begin your new repayments

6. Important Considerations Before Remortgaging

Financial Considerations:

• Early repayment charges - These can significantly reduce potential savings
• Arrangement fees - Can range from £999 to over £2,000 depending on the product
• Legal and valuation fees - Some lenders offer incentives or cashback, but terms vary
• Overall cost vs. benefit - Ensure total costs do not outweigh the financial benefit

Personal Circumstances:

• Duration you plan to remain in the property
• Changes in income or employment
• Planned life events (e.g. parental leave, relocation, retirement)

Always ensure the mortgage product aligns with your future plans and financial situation.

7. Remortgaging FAQs

How much equity do I need to remortgage?

Most lenders require a minimum of 10 - 15% equity, but better rates are generally offered to borrowers with at least 25% equity. LTV thresholds directly affect pricing.

Can I remortgage to pay off debts?

This is possible through debt consolidation, but it involves securing previously unsecured debts against your property. This increases the risk of repossession if repayments are missed. Always seek advice from a regulated mortgage adviser before proceeding.

How often can I remortgage?

You can technically remortgage at any time, but doing so before the end of a fixed-rate deal may incur charges. It's usually most cost-effective at the end of your current mortgage term.

Will remortgaging affect my credit score?

Your credit file may show a temporary dip due to lender credit checks, but this generally stabilises if repayments are made on time.

Risk Warning:Your home may be repossessed if you do not keep up repayments on your mortgage.

Speak to a Regulated Mortgage Adviser

If you're considering remortgaging, speaking to a FCA-authorised mortgage adviser can help you understand your options based on your individual circumstances. An adviser will assess product suitability and compare offers from a range of lenders.

Contact WIS Mortgages for personalised advice tailored to your goals and financial profile.

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