How does remortgaging work?

28th March 2020

A remortgage refers to a new mortgage that you take out on your home or other property you own to either release cash or to replace your existing mortgage. Around a third of all UK home loans are remortgages and by far the biggest reason for remortgaging a home is to save money.

If you’re coming to the end of a fixed-rate deal or simply want to reduce your costs, you can save a lot of money by switching to a remortgage at a cheaper rate. You’ll want to remortgage before your existing rate ends, so your monthly repayments don’t move to a standard variable rate (SVR) – so start looking into this six months before your deal ends. You could be subject to an early repayment charge and/or an exit charge if you’re still tied into a fixed-rate deal.

You can also remortgage to release equity in your home – if you have a big purchase to fund, home improvements to make or want to pay for your retirement, taking out a new deal to borrow more than your existing mortgage, you can take out a cash lump sum.

Essentially, you’ll be clearing your current mortgage with funds raised from your remortgage and using your home as the security for your new loan. You’ll then make mortgage repayments to your new lender with a new set of repayment terms. You can remortgage with your existing lender, which may save time and money, but you’ll want to talk through your options with your mortgage broker.

If you’re thinking of remortgaging your home, you should talk to an independent mortgage adviser who’ll have access to the best rates, deals and remortgage products. Talk to our team of expert mortgage advisers today to find out how much you could save with a remortgage. Call us on 08454 500200 or click here to make an enquiry.

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November 2020

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