Remortgaging means replacing your existing mortgage with a new mortgage, usually from a different lender, while staying in the same property. In the UK, it is the closest equivalent to mortgage refinancing. Homeowners commonly consider it when a fixed or discounted deal is ending, when they want different mortgage features, or when their circumstances have changed.
A remortgage can reduce borrowing costs, but it is not automatically a saving. Fees and any early repayment charge can change the result, so compare the total cost of switching rather than the advertised rate alone.
What does remortgaging actually mean?
The simplest remortgage meaning is that your old mortgage is paid off and replaced by a new mortgage secured against the same home. If you switch lender, the new lender provides the funds needed to repay the old mortgage, and you then make repayments under the new agreement.
This differs from a product transfer. With a product transfer, you stay with your existing lender but move to another mortgage deal it offers. A product transfer can sometimes involve fewer checks and costs, while a full remortgage may give you access to a wider range of lenders and products.
People looking to refinance a mortgage in the UK are often choosing between these two routes. Comparing both is sensible because the lowest rate is not always the lowest-cost option.
Why do homeowners remortgage?
To avoid moving onto a standard variable rate
Many mortgages begin with an introductory deal, such as a fixed rate. When it ends, the mortgage may revert to the lender’s standard variable rate, which can be less competitive. Homeowners therefore often review options before their deal expires.
To reduce borrowing costs
A homeowner may qualify for a different deal because market rates have changed, their property value has risen, or they have paid down enough of the mortgage to reach a lower loan-to-value band. Loan-to-value, or LTV, compares the mortgage balance with the property’s value. A lower LTV can sometimes provide access to a wider choice of rates.
To change features or borrow more
Some borrowers want features such as more flexible overpayments. Others remortgage and increase borrowing for a major purpose such as home improvements. Additional borrowing increases the debt secured against the property, so the monthly payment, total interest cost and affordability all need careful consideration.
How switching mortgage deals works
Start by checking when your current deal ends, your outstanding balance and whether an early repayment charge applies. It can be useful to review options several months before the deal expires so you have time to compare products and complete an application without rushing.
Compare any new deal offered by your current lender with remortgage options from other lenders. Look beyond the interest rate. Check product fees, incentives, the initial deal period, overpayment rules and any future early repayment charges.
If you apply to a new lender, it will normally assess your income, commitments, credit history, property value and requested borrowing against its criteria. It will also need an acceptable property valuation. Legal work is generally required when moving between lenders, although some deals include a legal service.
What does remortgaging cost?
Possible costs include a product or arrangement fee, valuation costs, legal or conveyancing costs, administration or exit fees, and an early repayment charge if you leave your existing deal during a penalty period. Some deals include incentives or services, but these should still be weighed against the total cost.
Consider a practical example. One two-year deal has a slightly lower rate but a £1,500 product fee, while another has a marginally higher rate and no product fee. The fee could erase much of the interest saving on a smaller balance, while the lower rate could still win on a larger one. Compare the actual cost over the period you expect to keep the deal.
When might remortgaging not be worthwhile?
Switching may be unattractive if a large early repayment charge applies, the mortgage balance is relatively small, you expect to move home soon, or the fees outweigh the potential savings. It can also be harder to move lender if your income has fallen, your commitments have increased, or the property does not meet a new lender’s criteria.
In those circumstances, a product transfer may deserve particular attention. Also be cautious about extending the mortgage term simply to reduce the monthly payment, because a longer term can increase the total interest paid.
Three checks before you apply
Check the end date and exit costs
Find the exact date your current deal ends and confirm any early repayment charge or mortgage exit fee. Knowing these figures helps you decide whether switching immediately or waiting is more sensible.
Check your loan-to-value position
Compare your outstanding mortgage with a realistic estimate of the property’s value. If you are close to a lower LTV threshold, reducing the balance may sometimes improve the range of deals available, depending on lender criteria.
Compare total cost, not rate alone
Include fees and incentives and consider how long you are likely to keep the deal. Useful related topics include remortgaging costs, how loan-to-value works, and when to remortgage before a fixed deal ends.
Frequently asked questions
Is remortgaging the same as refinancing?
Broadly, yes. Refinancing is the more common term in some countries, while UK lenders and advisers usually use remortgaging for replacing an existing mortgage on the same property. A same-lender product transfer is related but is different from moving to a new lender.
Do I need a deposit to remortgage?
You normally do not provide a new cash deposit as you would when buying a home. Instead, the equity already built up in the property helps determine your LTV. You may also choose to reduce the balance using savings, subject to your existing mortgage terms.
Can I remortgage before my fixed deal ends?
Yes, but leaving early may trigger an early repayment charge. Check that charge against any potential benefit from switching. Many homeowners research deals in advance and arrange completion around the end of the existing penalty period.
Does remortgaging involve affordability checks?
A move to a new lender will normally involve an assessment under that lender’s criteria, including income, expenditure and other commitments. A product transfer with the same lender can follow a different process, particularly where there is no additional borrowing or other material change.
Is remortgaging right for you?
Remortgaging is a chance to review the price and structure of one of your largest financial commitments. Consider it before you are forced into a rushed decision, especially as a fixed or discounted period approaches its end. Compare your current lender’s offer with the wider market, include every relevant fee, and think about your plans for the next few years.
If the savings remain clear after costs and the new mortgage fits your circumstances, switching can be worthwhile. If fees, penalties or new borrowing terms make the numbers less attractive, staying with your current deal for longer or using a product transfer may be the better choice.
