24th February 2023

How To Remortgage Your House

Remortgaging can be a great way to save money, but you will need to consider all of your circumstances and financial goals before committing. Understanding how to remortgage your house, what will happen to your existing mortgage, and whether or not you’re eligible for refinancing are all important factors to consider.

When you remortgage your house, you switch from one product or lender to another, usually at a lower rate of interest where available. This can save you money in the long run by reducing your monthly payments, and you can potentially raise money for home improvements or other purposes where appropriate and if it is suitable to do so.

When you first took out your mortgage, you may have secured a competitive rate and good terms. However, over time, the mortgage market can change and new deals can become available which may offer significantly better value than what you initially signed up for.

By remortgaging to a different loan provider or renegotiating your existing deal with the same lender, you could be able to access a more competitive rate. This could result in lower monthly repayments and enable you to build equity more quickly. Remortgaging to a more cost-effective deal could also reduce the overall amount of interest to be paid on your loan.

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Why should I remortgage?

There are several reasons why you might want to remortgage:

Lower Interest Rates

One of the key reasons homeowners remortgage is to access lower interest rates. If your current rate is higher than what's typically being offered to new customers, it could be beneficial for you to investigate remortgaging. This is particularly important for those on a lenders standard variable rate.

Consolidate Debt

Another reason homeowners may choose to remortgage is to consolidate debts from multiple sources into one payment. This means that instead of making payments on multiple credit cards or loans with varying interest rates, you can make one payment each month at a lower rate on your remortgage loan. If you want to remortgage for debt consolidation then you should seek specialist advice. Discuss this with your mortgage advisor in the first instance. It is vital that the adviser looks to see if this is appropriate for your circumstances as doing this may reduce monthly payments but the overall amount paid back due to a longer term may be higher.

So please think carefully before securing other debts against your home or property.

Access Additional Funds

Remortgaging may give you access to additional funds; for example, if your property has increased in value since taking out your original loan and you wish to access the equity. This could be used for home improvements or other large purchases that require a significant upfront payment. It is important to consider the impact of releasing your equity on your mortgage repayments and how long it will take you to pay off the mortgage. Speak to your mortgage advisor in the first instance to identify if this is the right option for you.

Flexibility

Depending on the terms of your remortgage, you may be able to amend the length of your loan term or switch from interest-only to repayment.

When is the best time to remortgage your house?

Fixed-rate, tracker, and discount mortgages typically have a two to five-year period of validity, after which you will automatically switch to your lender's Standard Variable Rate (SVR) which is usually a much higher interest rate.

To prevent this, review all available options for remortgaging around three to six months before the end of your current agreement. This will allow sufficient time for a thorough search and ensure that you won't be stuck necessarily on an expensive SVR.

Things to consider when remortgaging

To ensure that you get the best deal for your situation, you will need to do some research and consider the following:

What type of mortgage product is best suited to your needs?

Different products may offer different benefits, such as a lower interest rate, cashback incentives, or even a combination of both; depending on what you are looking for and what lenders offer, one type of product might suit your needs better than another.

Research all your options thoroughly before committing to any mortgage deal, and bear in mind that banks will only ever recommend their own mortgage deals. An independent mortgage broker will help guide you through the process and give advice tailored to your individual needs.

Have your circumstances changed?

Any change in circumstances like marriage or self-employment might affect the offers available or your ability to get approved for a remortgage.

If your credit rating has decreased or you have taken on more credit commitments since you took out your current mortgage, you may not be able to access the best deals or meet the affordability requirements for a remortgage.

The cost of a remortgage

While remortgaging can often save you money, this isn't always the case. Consider the costs of remortgaging before you go ahead, for example, valuation fees, mortgage broker fees, and arrangement fees.

Don't forget to check if you have any early repayment charges on your current mortgage.

These are normally applied if you are still in your introductory deal period. If you have a large early repayment fee it may be better to wait.

How to remortgage your house if you are self-employed

If you are self-employed and looking to remortgage your house, all of the usual criteria still apply; you'll need to provide proof of income, have an acceptable credit score and meet affordability guidelines. The major difference for those who are self-employed is that lenders will require extra evidence in order to prove that you can afford the loan.

Be prepared to provide a lot of evidence of your financial stability. Documents such as tax returns and bank statements showing regular payments into your business account may be requested in order to give lenders further assurance when carrying out their affordability checks. A good credit rating is also even more important when remortgaging as a self-employed person.

It helps to get free initial advice from professional mortgage advisers such as WIS who are experienced in self-employed mortgages and can offer specialist advice for contractors.

WIS can also support our self-employed customers via our accountancy service for businesses and contractors in London, Hertfordshire, Essex, Kent, and Berkshire. Accountancy is not regulated by the FCA.

Get in touch for free advice on how to remortgage your house or use our mortgage calculator.

As a mortgage is secured against your home/property it may be repossessed if you do not keep up with the mortgage repayments.

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