How Does a Remortgage Work?

Remortgaging is something that people go through all the time. But what does a remortgage mean in practice? What are the actual benefits of remortgaging a property – and when can you remortgage at all? Some of the processes can seem a little confusing at first, which is why we’re here to help break things down a little for you.

What Does Remortgage Mean?

When you remortgage, you move who you pay your mortgage to. You might do this by moving to a different lender, or you might even choose to set up a whole new deal with the same lender. In either case, it makes sense to look for the best possible rates. Over time, mortgage rates can change, as can interest rates. Why shouldn’t you keep an eye out for a deal which saves you money?

To ‘remortgage’, you ‘mortgage again’ – makes sense? It will do in practice!

When Can I Remortgage?

That’s the million-pound question. You should think about remortgaging when you are coming towards the end of an existing mortgage scheme with your lender, or possibly when you feel there are better rates available. It is important to check though that you don’t have any early repayment charges on your existing mortgage (an adviser can help you with this).

You’re able to remortgage at any time you like. However, it is important to make sure you’re not changing lenders if you’re not going to see any benefits, otherwise, there is no point.

The best time to look for new mortgage deals, with your same lender or with others, is when you are coming towards the end of your current deal. A general recommendation would be 4-5 months in advance to ensure that everything is in place before your current deal ends.

Your existing lender may offer you a new deal, as your mortgage scheme is ending. However, reviewing your options with a professional mortgage broker at this stage could prove valuable. Often, other lenders will have better deals available, meaning you could be paying less or using any savings to reduce the term of your mortgage. Reviewing your options is therefore key.

Not all deals last forever. Therefore, you should be careful to look for deals that are going to be most cost-effective for you and your needs moving forward.

You should also think about taking on a new mortgage if you’ve seen that interest rates are getting lower. You might even want to remortgage if you feel your home value is going up!

Can You Remortgage to Pay Off Debt?

In theory, yes. However, there are factors to be considered, do you have sufficient equity within your home? If consolidating it may be that you are looking to reduce your current monthly expenditure, if this is the case you need to consider that you may be taking on additional borrowing on your mortgage, where you will potentially be paying interest over a longer period..If you’re looking for a remortgage or want to learn more about how a remortgage could benefit you in the long run, it’s time to get in touch with an expert. Getting professional advice is key.

Can I Remortgage for Home Improvements?

As above, provided you have equity within your property and the lender deems the additional borrowing affordable. The answer is potentially “yes”.

You will not generally be able to borrow additional funds versus the future value of the property. This means that your existing mortgage plus any additional required funds must be below the present value of your property and generally not exceed 90% of the value.