How to Remortgage: Save Money, Refinance Your Mortgage, and Unlock Home Equity
Understanding how to remortgage is an important part of managing a mortgage over the long term. Many UK homeowners choose to remortgage at different stages, whether to review their interest rate, refinance their mortgage arrangements, or access equity built up in their property.
Remortgaging involves replacing an existing mortgage with a new one, either with the same lender or a different provider. This guide explains how remortgaging works, why people consider it, and the key factors lenders typically assess. It is written to provide general mortgage information only.
What Is Remortgaging?
Remortgaging is the process of switching from your current mortgage deal to a new one, without moving home. The new mortgage repays the existing mortgage, and you then continue repayments under the new terms.
A remortgage can involve:
- Changing to a new interest rate or product
- Moving to a different lender
- Borrowing additional funds against the property
- Adjusting the mortgage term
Some homeowners remortgage multiple times over the life of their mortgage, often when an initial fixed or discounted rate ends.
Why Do People Remortgage?
There are several common reasons people look at how to remortgage their property.
Reviewing Interest Rates
When an initial mortgage deal ends, the loan often moves onto the lender’s standard variable rate. This rate is usually higher and can change over time. Remortgaging allows borrowers to review available products rather than remaining on a variable rate.
Refinancing an Existing Mortgage
Refinancing refers to changing the structure of a mortgage. This might include altering the term length, switching between interest-only and repayment, or consolidating borrowing.
Unlocking Home Equity
As mortgage balances reduce and property values change, equity can build up. Some homeowners remortgage to release a portion of this equity, subject to lender criteria.
Changing Mortgage Features
Some borrowers remortgage to access different features, such as overpayment flexibility or a different type of interest rate.
When Can You Remortgage?
In most cases, you can remortgage at any time, but timing can affect costs.
Many mortgage deals include early repayment charges (ERCs) during an initial period. These charges apply if the mortgage is repaid or switched before the deal ends.
Common remortgage timings include:
- When a fixed or discounted rate is ending
- When ERCs no longer apply
- When financial circumstances change
Understanding the timing of your existing mortgage deal is an important first step.
How the Remortgaging Process Works
The remortgaging process is similar in many ways to applying for a mortgage for the first time.
READY TO GET STARTED?
Make a mortgage enquiry with Mortgage Bridge
If this guide relates to your situation, you can make a quick mortgage enquiry and we’ll be in touch to understand what you’re looking to do and how we can help.
Make a mortgage enquiry →No obligation. Mortgage Bridge acts as a mortgage introducer.
Reviewing Your Current Mortgage
This includes checking:
- Current interest rate
- Remaining mortgage balance
- Term length
- Whether ERCs apply
This information helps establish whether remortgaging is feasible at a given time.
Assessing Eligibility
Lenders assess remortgage applications using affordability checks, credit history, and property details. Changes to income, outgoings, or credit profile since the original mortgage can affect eligibility.
Property Valuation
Most remortgages involve a valuation to confirm the property’s value. This helps the lender calculate the loan-to-value (LTV) ratio, which influences product availability.
Legal Work
A solicitor or conveyancer handles the legal process of redeeming the existing mortgage and registering the new one. Some remortgage products include basic legal costs, while others do not.
Loan-to-Value (LTV) and Remortgaging
Loan-to-value is the percentage of the property’s value that is being borrowed. For example, a £150,000 mortgage on a £200,000 property is a 75% LTV.
LTV plays a key role in remortgaging because:
- Lower LTVs usually offer access to a wider range of products
- Interest rates are often more competitive at lower LTV bands
- Equity growth can improve remortgage options over time
Changes in property value or mortgage balance can move a borrower into a different LTV band when remortgaging.
Remortgaging to Save Money
Many homeowners explore how to remortgage as a way to reduce monthly payments or overall interest costs.
This can involve:
- Switching from a higher variable rate to a fixed rate
- Moving to a lower interest rate within a different LTV band
- Adjusting the mortgage term
While lower rates may reduce monthly payments, extending the term can increase the total interest paid over time. Lenders assess affordability regardless of the reason for remortgaging.
Refinancing Your Mortgage
Refinancing a mortgage means changing its structure rather than just the interest rate.
Examples include:
- Switching from interest-only to repayment
- Shortening or extending the mortgage term
- Consolidating unsecured borrowing into the mortgage
Lenders assess refinancing applications carefully, particularly where additional borrowing is involved.
Unlocking Home Equity Through Remortgaging
Home equity is the difference between the property’s value and the outstanding mortgage balance. Some borrowers choose to remortgage to release part of this equity.
Equity release through remortgaging may be used for purposes such as:
- Home improvements
- Funding large expenses
- Supporting other property-related costs
Any additional borrowing increases the mortgage balance and affects affordability. Lenders will assess income, outgoings, and overall sustainability.
Credit History and Remortgaging
Credit history is reviewed during a remortgage application, even if you stay with the same lender. Missed payments, defaults, or other adverse credit markers since the original mortgage was taken out can affect product availability.
Some borrowers assume remortgaging is guaranteed, but lenders still apply current criteria at the time of application.
Income and Affordability Checks
Unlike some older mortgage arrangements, most remortgage applications involve a full affordability assessment. This typically includes:
- Income verification
- Review of regular outgoings
- Existing credit commitments
- Stress testing against potential rate increases
Changes to employment status or income type can affect remortgage outcomes.
Fees and Costs to Consider
Remortgaging can involve several costs, which should be considered alongside any potential savings.
Common costs include:
- Arrangement or product fees
- Valuation fees
- Legal fees
- Early repayment charges on the existing mortgage
Some products include incentives such as free valuations or legal work, but this varies by lender.
Staying With Your Existing Lender
Some lenders offer product transfers, which allow borrowers to switch deals without a full remortgage application. These may involve fewer checks but usually limit product choice to that lender’s range.
A full remortgage allows comparison across the wider market but involves a full application process.
Remortgaging Buy-to-Let Properties
The remortgaging process for buy-to-let properties is similar but often places greater emphasis on rental income and coverage ratios. Personal income may still be reviewed, depending on lender criteria.
Buy-to-let remortgaging also typically involves higher minimum equity requirements.
Common Misunderstandings About Remortgaging
“Remortgaging Is Automatic”
Remortgaging always involves lender approval. It is not guaranteed.
“I Can Borrow Whatever Equity I Have”
Additional borrowing is subject to affordability checks and lender limits.
“My Credit History Doesn’t Matter Anymore”
Credit history is still assessed, even if you already have a mortgage.
Preparing for a Remortgage
People considering how to remortgage often prepare by:
- Reviewing their credit report
- Understanding their current mortgage terms
- Checking remaining balance and ERCs
- Allowing time before a deal ends
Preparation can help avoid last-minute decisions when a mortgage rate expires.
Summary
Remortgaging is a common part of long-term mortgage planning and can be used to review interest rates, refinance existing borrowing, or unlock home equity. Understanding how remortgaging works, how lenders assess applications, and what costs may be involved helps set realistic expectations.
While remortgaging can offer flexibility, it always depends on individual circumstances, lender criteria, and market conditions at the time of application.
This article provides general information only. For personalised guidance, regulated mortgage advice is required.
Check your credit in detail
Access your full credit report
See your complete credit information from all three major agencies with Checkmyfile. Try it free, then it’s a paid monthly subscription – cancel online anytime.
Get started now
Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.