Remortgaging isn’t always the right option. If your financial situation has worsened since you applied for your existing mortgage, or if your property has dropped in value, you may struggle to find cheaper remortgage rates. If your income has fallen or your credit score has dropped, remortgaging might be difficult.
This is because, just like when you first took out a mortgage, when you apply for a remortgage, a lender will assess your affordability. There are strict rules lenders must follow when deciding whether to let you borrow money.
Lenders are also reluctant to extend mortgage terms for older borrowers. But even if remortgaging to extend your term isn’t possible, you may still be able to find a remortgage deal that costs you less.
It’s also worth knowing that not all mortgages can be ported to another property. So if you plan to move in the near future, find out if your remortgage could move with you.
If you remortgage before your current deal ends and during the lender’s tie-in period, you will likely have to pay an early repayment charge. This is a percentage of the remaining mortgage debt which usually reduces over time, meaning you pay less the later you leave. As this can run to thousands of pounds, it makes sense to check your current provider’s terms so you’re clear about their charges and what you would pay to exit at this stage.
If you only have a small mortgage left to pay off, you may find that some lenders have a minimum loan amount, usually £25,000, that they will accept as a remortgage.
Whether you switch to a new lender or stay with your existing one, it is likely you’ll need to have your recent financial information to hand when you apply. This will include:
If you’re applying for a joint remortgage, you will need to provide this information for both of you. You will also need to show proof of ID and address.
If you are staying with your existing lender and just switching deals, it is a more straightforward process than if you’re remortgaging with a new lender. This is provided you aren’t also making changes to your mortgage, such as borrowing more. A straightforward product transfer won’t usually involve as much admin.
Once the lender has all the information it needs and everything is in order, it will approve the remortgage and you can start making your new repayments.
While the main cost of remortgaging depends on the interest rate your lender sets, it’s important to consider all the fees that may also be charged, as they can soon mount up.
Types of remortgage fees for the lender you are moving to include:
For the lender you are leaving:
Find out exactly what fees you’ll have to pay to your current and future lender before going ahead with a remortgage.
Get in touch today to find out more about remortgaging.
Join the conversation and keep up-to-date with our latest news.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
You may have to pay an early repayment charge to your existing lender if you remortgage.