How does Remortgaging work?

Remortgaging works by you refinancing your home from one lender to another where the other lender offers you a better rate than your current mortgage lender. They will assess your ability to be able to afford the mortgage such as checking your income, credit searches and a valuation on the property to ensure you can afford the mortgage for the entire term.

Are you looking for a way to remortgage your home? This guide will walk you through the entire process, including how much remortgaging your property could cost and what you should think about before proceeding.

What is a remortgage?

When you apply for a new mortgage with a different lender while staying in your current house, this is known as a remortgage. It is not the same as other people’s idea of remortgaging, which is borrowing more money or switching rate with their current lender.

Want to know more?

For more details, call our Mortgage Saving Experts today.

Is it time to remortgage?

If your existing mortgage deal is about to expire or has already switched to a Standard variable rate, it’s worth checking out the new deals. Your loan-to-value ratio could have improved if your property is worth more than when you purchased it, for example, which may mean you have access to a wider variety of offers and cheaper rates.

Remortgaging will also help you save money for home improvements or a special purchase. Just make sure you can handle the extra payment over the life of the loan. If you can’t afford the payments, your home may be at risk.

Large changes in your life, whether planned or unplanned, can mean that your current mortgage is no longer adequate. Remortgaging allows you to find a deal with us that is a great match for you now and in the future, whether you’re starting a family or anticipating a big improvement in your income.

Check the market for mortgage deals

To find out how much you can borrow, use our Mortgage Calculator.

Mortgage Saving Experts have experienced advisers who can search the whole of the market for you, so you know you are getting the cheapest deal. We do all the research and hard work for you, so you don’t have to. After all it’s what we do.

Get mortgage advice

Getting advice from a competent professional provides you with further insurance because you know you are getting the right mortgage for you based on your current and future circumstances and goals. This could end up saving you tens of thousands of pounds in comparison to you searching the market yourself and getting to apply for the wrong mortgage.

Related Links

Getting ready to remortgage

If you wish to look to remortgage:

First, get a decent mortgage adviser like us.

Second, get all the relevant information together such as proof of ID and proof of address, the last 3 months payslips, latest P60 and the last 3 months bank statements as a minimum.

Our adviser will have a chat with you to see what you are looking to do and discuss your options. We will then search the market for you, make a recommendation to you then we can apply for the mortgage for you and process it through to completion guiding you through the process and giving you regular updates and advice if needed.

Once your mortgage has formerly been agreed we will then discuss advise you on your protection needs such as life insurance, critical illness cover and so on.

What will it cost to leave your current mortgage?

Some mortgages impose fees if you leave under certain conditions, such as an exit fee or an early repayment charge. If your current mortgage rate hasn’t finished, you could end up paying thousands of pounds, so check the paperwork you got from your current lender or contact them for more details.

What do you want from a new mortgage?

Do you want to reduce your monthly payments or be able to pay off your mortgage faster? Is a fixed rate the best option for you, as it guarantees that your payments will not adjust for a set period of time? Consider what you need right now and how your requirements will change in the future.

Want to know more?

Get in touch with of our mortgage saving experts today.

Is your credit score in good shape?

When you apply for a new mortgage, the new lender will run your credit report through credit bureaus. Ensure the information on your credit score is right before applying, as even a spelling error in your address history may trigger a problem.

How much can you borrow?

To find out how much you should borrow is complex, so if you would like a rough figure, please contact us to discuss this and we can give you an indication. These days there is no one simple formula to working this out as there are so many lenders and factors which could affect this. If you wish to find out what your monthly payments will be, use our mortgage calculator. Consider how a rise in interest rates could impact your finances – our calculator will help you figure out how rate increases could affect your payments.

Which remortgage deals are available?

You can begin comparing mortgage offers once you know:

  1. How much you want to borrow.
  2. What kind of rate you want (i.e., 2 years fixed).
  3. How long you want to take the mortgage over (i.e., 25 years).

How the remortgage process works

When deciding how to remortgage your house, it’s important to remember your overall financial condition. It’s also important to know what happens when you remortgage, so here are the steps you’ll need to take.

Complete an Agreement in Principle

Most lenders now allow you to obtain an Agreement in Principle through the internet (AIP). It’s a way to see if a lender can lend you the money you need and whether they will consider your mortgage application. Some lenders do not do a full credit check (soft footprint) and some lenders do a full credit check (hard footprint). A hard footprint on your credit report will reduce your credit score so be careful because if you do lots of AIPs you could badly affect your credit rating. My advice to you is to speak with one of our advisers as we can narrow the chance of you being declined or refused the mortgage at AIP stage because we will know which lenders may be available to you.

Consider all the costs

Check if the lender to which you want to transfer your mortgage to charges any of the following fees to ensure that remortgaging would benefit you:

  • Application fee – a charge to set up your new mortgage. Also known as an arrangement, product or booking fee.
  • Valuation fee – to confirm the value of your property.
  • Solicitor’s fee – a solicitor will need to manage the transfer of your mortgage.

If you plan to remortgage in the future, ask any potential lenders if you’ll have to pay an exit fee or an early repayment charge.

Apply for your new mortgage

You should apply for a remortgage if you have an AIP. You’ll have to include specifics about your personal and financial situation, as well as your new mortgage. Make sure you have proof of income as well as documentation for any loans or other credit commitments.

Completing your remortgage

The final steps of a remortgage are somewhat similar to those of purchasing a new home. Your new lender will run a credit check to validate your current financial situation and arrange for a valuation of your home. The transfer of your mortgage would include the services of a solicitor or conveyancer. Some lenders can include this as a free service.

Want to know more?

Get in touch with of our mortgage saving experts today.

Remortgaging with us

Get a Mortgage quote [ADD LINK]

You can use the “get a mortgage quote” button on our home page which will allow you to get an idea if you can potentially borrow the amount you need and what your rates, monthly payments and fees may be, but in order to get a more definitive quote its always best to speak with s human being because the rats you see may not necessarily be available to you as a computer will only tell you so much.

Agreement in Principle

Take the first step toward obtaining a mortgage:

Start an Agreement in Principle (AIP) online to see whether you could borrow the money you need.

Our advisors, who have extensive knowledge of the mortgage industry, take the time to get to know you, your financial condition, and your life goals.

From a residential remortgage to a buy-to-let mortgage, from a first-time buyer mortgage to a retirement or equity release mortgage, we have over 50 years of collective experience working with all forms of mortgages.

Mortgage Lenders

FAQs

Is remortgaging a good idea?

Remortgaging can help you save money on your monthly mortgage payments, but it can be difficult to determine whether or not it is worthwhile in the long run. Remortgaging a new contract with a new provider may be a perfect way to take advantage of another limited time offer while still saving money.

What happens during remortgage?

When you remortgage your home, you adjust the mortgage you have on it, either by switching to a new lender or switching to a different product with your current lender (this is more typically know as a product transfer or rate switch). It can be a smart way to get better mortgage terms and lower interest rates.

How does remortgaging release equity?

You remortgage your property for more money to release equity. Another way to achieve this is to borrow more money from your existing mortgage company and the third way is to use a secured loan company to raise finance on your property. The second and third way of releasing equity means you do not touch your existing mortgage which is ideal because if you are still tied into a fixed rate with an early repayment charge you will not have to pay this if you borrow more money form your current lender or get a secured loan from another company.

Can I remortgage if I’m self-employed?

Yes, but additional information may be required to prove your income. If you have a limited company business, we will look at your accounts, salary and dividends, or we will need to consider the net profit of the company instead. Lenders have different criteria that will impact the amount they will lend you, so it’s worth consulting with an attorney to find the right lender for your situation. If you are a sole trader or partnership the amount of income the lender will use to assess your ability to afford the mortgage is your net profit which has been declared to the Inland Revenue.

Can I remortgage using my limited company’s retained profit?

Some lenders look at your salary and dividends, but we deal with some lenders who look at your company’s earnings both before and after corporation tax is charged plus salary. Lenders usually base their offers on profit created in the current year, or most with an average of the previous two- or three-years’ figures. This is beneficial for limited company directors whose company has net profit which is higher than their dividend income which we can use as earned income even though you have not drawn on that income. The lender does this because they know the income is there should you need to draw on more income.

Can I get a mortgage as a contractor or a contractor remortgage?

Yes, but you may be asked to provide additional documentation to show your salary. We will look at the contracts you have in place, the day rate, contract duration, and whether or not it has been renewed to help us determine the various conditions lenders have that will influence the amount they are willing to lend you at Mortgage Saving Experts. Tell our team what you want to do so they can help you figure out what you’ll need and how much you can borrow.

Can I remortgage if I am an IT contractor?

Yes, there are basic rules for IT contractors, and more detail, such as whether you’re self-employed or employed or whether you have a Limited Company, will be needed. Some lenders can calculate your loan based on your daily rate. This includes if you have contracts which are inside or outside IR35.

Can I remortgage if I am on a fixed-term contract?

Yes, this may be considered; however, more details would be required, such as your job history, whether your contract has been extended or renewed in the past, and how much time is left on your contract.

Can I remortgage if I am a day/weekly rate or zero-hours contractor?

We know of lenders who will assist you if you have a clear track record of jobs with the same employer and consistent monthly earnings. With zero hours contracts the lenders generally like proof you of 12 months of work on a zero hours contract and will base your salary on what you have earnt over the last 12 months. Please contact our team so that we can inform you of the various choices available to you.

Can I remortgage if I work for an umbrella company?

Yes, this is something to think about. We’ll need more details to figure out the lenders can support, including whether you’re self-employed or employed by the company. This is typical for IT contractors or anyone working within the new IR35 guidelines, but it should not be a problem.

Can I remortgage if I am a temporary worker or an agency worker?

When applying for a mortgage, this situation can be tough, but we have arranged mortgage for agency or temporary workers in the past. Do not hesitate to contact us at Mortgage Saving Experts to see which lenders can help.

Can I remortgage during a fixed term?

Remortgaging during a fixed period is possible, but it might not be the best choice for you. This is especially important to remember if your current mortgage, like many others on the market, has an early repayment charge. If you’re thinking of remortgaging to unlock equity, it may be a smarter idea to take out a short-term loan or doing a further advance with your current lender (instead of having to pay the early repayment charge). Whatever you decide, let us know what you’re doing, and we’ll see what we can do to assist you.

Can I remortgage with the same lender?

Yes, although this is not called a remortgage it is called a “product transfer” or “rate switch” and you are attempting to negotiate a new rate with them, and if you need additional funds, this is known as a further advance. If you need additional funds or want to move to a different rate with the same lender, we will help you determine if this is the right option and your circumstances or whether you should get a better rate with another lender. We offer a free initial consultation, so call us on 01273 738 072, and we’ll compare rates from the whole of the market – including fees – before you commit to making an application.

Can I remortgage if I have negative equity?

You have no equity in your home if you are in “negative equity.” This puts you at a higher risk for lenders, making it more difficult to negotiate a new mortgage contract. If you find yourself in this situation, please contact us to help you figure out the best course of action.

Can I remortgage my shared ownership home?

Yes, you may be able to. However, since this is a particular form of lending, you will need to find a lender who offers Shared Ownership mortgages. If you’re looking for a shared ownership mortgage or want to buy an additional share of your home – known as ‘stair casing’ – it’s always worth getting in touch with us first.

Can I remortgage when I’m over 60 or retired?

Yes, there are several different forms of mortgages into retirement available in the later life lending industry, all of which are explicitly targeted to borrowers approaching or have reached retirement age. Retirement mortgages are a flexible way to borrow in retirement, with the option of repaying the loan by selling your house. There are a variety of options depending on the specific circumstances and requirements. If you are in or about to join this age group, our team will help you understand your choices.

I own my house outright. Can I remortgage?

If you’ve paid off your mortgage, you’re in a strong place to remortgage because you own 100% of the equity in your home. Raising funds on an unencumbered property refers to a remortgage on a home with no outstanding mortgage. So, if you ask, “Can I remortgage my house if I own it?” the answer is yes, as long as you meet the standard mortgage requirements of income, expenditure, and so on. The amount you plan to borrow as a percentage of your home’s current value, also known as the “loan to value” (LTV) ratio, will determine the deals available to you when you are considering a remortgage. Talking to our team about finding the right lender for you is a good idea.
Want to know more?

For more details, call our Mortgage Saving Experts today.

Want to know more?

Get in touch with of our mortgage saving experts today to find out how we can help.

Get in touch

MSE