What is a Remortgage?

A remortgage is when you apply for a new mortgage from a different lender over a property which you already own. In this process, a new mortgage is taken out in order to pay in full the current mortgage. In this process, you will need to consult with a conveyancer.

In the UK, 44,000 people every month remortgage their property. There are several reasons for doing so with the most popular being:

• Their current mortgage is due to expire.

• A better interest rate with a different lender.

• To complete a mortgage faster.

How long does this take?

Many firms have estimated this can take between four and eight weeks to remortgage but in reality, this can be done in less. If you remain with the same lender, the transaction is a product transfer which can be quicker.

When is the best time to remortgage?

It is important you remortgage your property at a good time in order to ensure you have the best deal and you are saving the most money. The two most important times to consider are:

• End of your fixed-rate term – Those on a fixed-rate mortgage, once this period expires your mortgage will be moved to a Standard Variable Rate (SVR). This rate tends to be higher and therefore monthly payments will begin to increase.

• Low interest rate – This will mean lower monthly payments and an overall better mortgage offer.

Shall I use the same lender?

There is no obligation to remortgage with the same lender you currently use. However, it may be worth noting what they may be able to offer you. If you remain with the lender, the transaction will be a product transfer as specified above and this is usually a much faster process. However, we do advise researching other lenders and mortgage products as a comparative.

Do I need a conveyancer?

If you are remaining with the same lender as a product transfer, you will not need a conveyancer. If you are switching to a different lender, you will need a solicitor to assist in the remortgage. Lenders may suggest their own solicitors but it may be worth comparing as it is likely you will be able to obtain a better deal before proceeding.

Remortgage checklist:

Here are a few things you can do to be prepared for your remortgage:

1. Research – This is the most important and obvious first. Ensure that you have the researched to the best of your ability and end ensure you have covered deals available to mortgage brokers and those directly to you to ensure that you have the best deal.

2. Credit Score – A higher credit score will allow you to be eligible for more deals and usually at better value. It is important to keep a watchful eye over this to ensure it has not been negatively influenced.

3. Property Valuation – It may be worth to obtain a property valuation before proceeding to see the difference in value from when you initially purchased the property and at the time of remortgage. If you contact your local estate agents they should be able to assist, usually free of charge.

What about a deposit?

Usually, most lenders will not require a deposit and the equity you have in your home will suffice.

What if I have negative equity?

Negative equity is when the value of your property is less than what you owe on your current mortgage. This is usually due to a drop in property prices. Unless you are able to redeem the savings using your own funds, most lenders will typically avoid properties in negative equity.

What about a buy to let?

Most lenders have no issue with lending on a buy to let property. They may wish to request further information to assess whether the rental income is sufficient to pay the monthly repayments and costs associated with the property.