Remortgaging is one of the most effective ways to reduce your monthly outgoings, yet millions of UK homeowners sit on their lender's standard variable rate paying far more than they need to. This guide explains exactly how to remortgage and when to do it.
- What is remortgaging?
- When should you start looking?
- The remortgage process
- How long does remortgaging take?
- Costs to consider
What is remortgaging?
Remortgaging means switching your existing mortgage to a new deal — either with your current lender or a different one. Most people remortgage to get a better interest rate when their current fixed or tracker deal comes to an end, though you can also remortgage to release equity or change your mortgage term.
When should you start looking?
You can typically lock in a new rate up to six months before your current deal expires. Starting this process early is important because it protects you from rate changes and means you will not accidentally roll onto your lender's standard variable rate, which is almost always significantly more expensive than any fixed deal.
Set a reminder in your calendar six months before your mortgage deal ends.
The remortgage process
Start by checking your current mortgage details — the remaining balance, your current rate, when your deal expires, and whether there are any early repayment charges. Early repayment charges can make it expensive to leave a deal before it ends, so always factor these in.
Next, use a whole-of-market mortgage broker rather than going direct to a single lender. A good broker will search hundreds of deals across the entire market, including deals not available directly to consumers. Most brokers are free to you as they receive a commission from the lender.
Your broker will recommend the most suitable deal, handle the application, and manage the process through to completion.
How long does remortgaging take?
Remortgaging with a new lender typically takes four to eight weeks from application to completion. Switching to a new deal with your existing lender — called a product transfer — is much faster, often completed within days.
Costs to consider
You may face arrangement fees on your new mortgage, which can range from zero to over £1,000. Always factor these into your comparison — a slightly higher rate with no fee can sometimes be cheaper overall than a lower rate with a large fee, depending on your loan size and term.
Bottom line
If your mortgage fixed rate is ending in the next six months, start looking at remortgage options now. Even a small reduction in your interest rate can save you thousands of pounds over the remaining term of your mortgage.