How Does Remortgaging Work?
Remortgaging is where you take out a new mortgage with a new lender on a property you already own and have a mortgage on. The new mortgage takes the place of the mortgage you originally had on the property.
When Is It Suitable?
Remortgaging may be suitable for you if:
- The introductory deal on your current mortgage is due to end soon and you’d like to avoid being transferred onto your lender’s SVR (standard variable rate)
- You want to consolidate multiple other debts
- You need money to fund home improvements
- You have a large expense coming up - like a wedding or school fees, or you want to help your children with a deposit, etc.
Remortgaging may be unsuitable for you if:
- You need a small mortgage below £25,000
- You need to borrow a very high percentage of your property’s value
- You took out your current mortgage very recently
- Your mortgage has high ERCs (early repayment charges)
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Why Use a Remortgage Broker like John Charcol?
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With over 45 years of service, we've seen it all. We can save you money, time and make remortgaging your property easy.
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We Give Personal, Expert Advice
We work around your schedule to help you arrange a mortgage that suits your circumstances, no matter how complex.
1. First Call
When you contact us, we’ll arrange an appointment between you and one of our advisers – this can be over the phone or face to face. Your adviser will ask you some questions and, once they have all the right information, they’ll go away and find you the best mortgage for your current and future needs. They’ll then organise a follow up appointment to tell you about their recommendation.
2. Decision in Principle
After your adviser has presented you with their recommendation and you’re happy to proceed, they’ll work on securing your DIP (Decision in Principle). Your DIP is a promise from the lender that they’ll loan you the money on the condition that the information you’ve provided is correct and subject to a valuation on the property.
3. Pre-Application and Submission
Once the lender secures your DIP, we’ll start to prepare your mortgage application. We’ll send you a pack that explains all the different documents the lender needs. You’ll be assigned a client relationship manager who’ll go through your documents and get everything ready for submission. Your adviser will then submit your full mortgage application.
4. Lender Underwriting and Valuation
The lender carries out a process called “underwriting” where they check all the information and documents you’ve provided in your application. They’ll also instruct a mortgage valuation on the property to make sure there are no significant problems with it. Sometimes a lender will only instruct a desktop valuation – rather than a physical valuation – as your property would have likely had a valuation and internal inspection when you took out your first mortgage.
5. Mortgage Offer
Following a successful underwriting process and valuation, the lender will accept your application and send you a mortgage offer. They’ll also send a copy to us.
After you accept the mortgage offer, you’ll go through conveyancing which is where a solicitor arranges all the legal paperwork so you can transfer from one lender to another.
Finally, after you’ve signed all the paperwork, your solicitor will set a date to draw down the new money to clear the outstanding balance with your current lender. Any excess funds will be returned to you. This is called completion.
Is Remortgaging a Good Idea?
You Can Save Money
When you come off your introductory deal you’ll go onto your lender’s SVR, which will be higher than your original rate. Switching to a new deal can help you make significant savings.
It Can Help You Avoid Moving Home
Remortgaging and adapting or adding an extension to your current home can be cheaper than to move home entirely.
You Can Raise Money
Remortgaging for an amount that’s larger than the outstanding balance on your remaining mortgage can help you pay for major outgoings, rather than borrowing separately - and in some cases more expensively - from other sources.
It Can Help You Accommodate a Change in Your Circumstances
If your financial situation has changed, you may need a new mortgage that accommodates different needs – like higher overpayments or a lower monthly rate. Remortgaging is a way to replace your current mortgage with one that better suits your requirements.
You May End Up Paying More Overall When You Consolidate Debts
Remortgaging can help you pay off urgent debts but, as you would typically have a mortgage for a long period of time, you could end up paying more interest in the long term even though mortgage interest rates are usually lower than those for a lot of other types of loan.
You Could Face ERCs (Early Repayment Charges)
If you try remortgaging too early - i.e. before the introductory deal on your current mortgage ends - you could face ERCs which can make it expensive.
It Can Take Longer than a Product Transfer with a Further Advance
When you switch to a new deal with a new lender, that lender has to underwrite your application and you have to go through the legal part of the process – although this isn't as extensive as when you purchase a new property. Therefore, if you need funds quickly, you may find a product transfer with a further advance more suitable as there’s no underwriting or conveyancing involved.
Average Remortgage Fees and Costs
|Lender's Product Fee||Valuation Fees||Legal Fees||Booking Fees|
|£0 - £2,000*||£0 - £1,500*||£0 - £500 (Plus VAT)*||£99 - £250*|
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What our customers say
John Charcol0330 057 5173£
Cutlers Exchange, 123 HoundsditchLondonEC3A 7BU
1957 Total reviews
My advisor, Randeep, had helped me with a couple of purchases now and has always come up with great solutions. Highly recommended.Posted
Randeep was brilliant at explaining exactly what we needed to do for our remortgage and at finding us the right mortgage provider and rate. We're very happy with the service!Posted
Randeep Sodhi’s service was excellent every step on the way. It wasn’t the most straightforward transaction, and he was very patient and resourceful at getting things sorted. Would highly recommend Randeep in particular.Posted
This review has taken me much much longer than it should have done, but when moving in a new home life becomes hectic for a while. However, we first contacted Razz over a year ago now, and have recently (a month or so) moved into our house. I can not express enough how easy going Razz was, how quick he got things done but also how laid back he was and wasn’t pushy when we laid back on the house move in the middle of it. When we did get back in contact, he was very quick to start where we had left things. Razz is the most friendliest person throughout the whole house move I have had to deal with, things were always straight forward for him, never a worry on our side and no job was too big for him to complete for us. With being first time buyers and a young couple, there was a lot that was understood as easy on our behalf, but Razz made that very straight forward and spoke in plain English to explain a lot easier to us. Both me and my partner are overwhelmed by his help and without him, the mortgage side of things would have not been as easy, let alone the best deal we could have wished for. I for one was really impressed when we got the figures back. Towards the end of the house move things started to drag and become quite stressful, which had nothing to do with Razz, however, I contacted him with my concerns and straight away he contacted the relevant people and all of a sudden things got moving very quick and in the week we had a moving in date. I will forever recommend Razz to anyone I know who may be moving house. Thank you for the bottom of our hearts to John Charcol and especially Razz for making our lives that little bit easier, being so very friendly and just one call away on every little question or situation I had. Razz your the best at what you do and we will forever be in your debts for making a first time buyer at so much ease with everything. We both really can’t thank you enough, when some companies we used were hard work, YOU lifted a massive weight of our shoulders by working along side you! Your not only known as amazing by us but also by a lot of others I know! Thanks again! Jordan and Lee.Posted
John Charcol have been absolutely amazing! As first time buyers especially in these uncertain times, we were really anxious about getting on the property ladder but our mortgage adviser Lawrence was brilliant in answering all of our questions and making sure we were comfortable with all of our decisions. Samantha was also fantastic with explaining all our options regarding insurance policies and the “serious stuff” which made the whole process much easier to understand! We couldn’t recommend John Charcol more highly and are so grateful and lucky to have their expertise during our journey!Posted
As two young(ish) self-employed people, my partner and I weren't convinced the type of mortgage we were looking for was going to be possible for us. We spoke to a couple of other mortgage advisors first who weren't able to find the right thing for us, but after speaking to Sophie at John Charcoal, our minds were instantly put at ease. Sophie found us the perfect mortgage so we could buy our dream home in time to save on the stamp duty holiday. After that, Samantha dealt with the rest of the process right through from receiving our mortgage offer to moving into our new home. We couldn't have asked for more helpful advisors. I believe the service was well worth the money, and wouldn't hesitate to use them again in the future.Posted
Really really happy with the service provided to me from John Charcol and in particular Razzak, I have already recommended them to friends and family and will continue to recommend this company to all. Professionalism was spot on and they go above and beyond to make the process easy. I was struggling to find a mortgage for a few months and after speaking with Razzak I was given a mortgage offer within under a month. Once again thank you very much for your servicesPosted
John Charcol were extremely professional throughout my purchase process, I couldn’t have asked for a more responsive and efficient service. They found the right mortgage for me within a couple of days and dealt with all that comes with it at every stage through to completion, not just a mortgage advice service but a dedicated team that delivers a high quality service throughout.Posted
Professional and friendly service from Randeep would recommendPosted
Buying a home is stressful enough, particularly in the current climate, so it's great to know that you have someone fighting your corner. We've been very happy with the service and support we've received throughout and they come highly recommended.Posted
How Long Does Remortgaging Your Home Take?
Remortgaging takes about 4 – 6 weeks on average. It can take slightly less or slightly more.
Do I Need to Wait Until My Current Deal Ends?
Remortgaging before your introductory deal ends is possible, however it’s likely you’ll face ERCs which can make doing this expensive.
You can start arranging your new mortgage up to 6 months before your current introductory rate ends. If it’s ready early, your solicitor can wait until any ERC period passes before taking the final steps to put it in place.
Can I Raise Money on My Current Property to Buy Another House?
Remortgaging can be a way to raise funds to buy another property, whether it’s a second home, holiday let, buy-to-let, etc. These funds can form part or all of the deposit on another property or, if you raise enough, you can buy the property outright with cash. You’ll need to declare to HMRC and/or your lender(s) which property will be your new main residence.
If you want to release equity from your existing property to buy another and convert your existing property to a buy-to-let at the same time, you’ll go through a process called let to buy.
Will Having Bad Credit Affect My Options?
Having bad credit will limit your choice of lenders, depending on the extent of the bad credit and how recent it was.
Can Remortgaging Help Me Pay Off Debt?
Remortgaging can help you pay off your debt in the sense that it can allow you to consolidate multiple other debts – e.g. car loan, credit card balances. The new mortgage that you would take out would need to be for an amount that's higher than the amount remaining on your current mortgage. This would enable you to release some equity that you could use to pay off your debts.
It’s important to note that remortgaging to consolidate debts can sometimes result in you paying more overall as, although mortgages have lower interest rates than a lot of other loans, they come with longer terms which means you earn and pay interest for a longer period.
Nevertheless, this may be a suitable option for you if your current debts have high interest rates or you need to pay them off soon.
How Does Remortgaging for Home Improvements Work?
Remortgaging can be a way for you to borrow some extra money to fund home improvements. Essentially, you borrow more on the new mortgage than the amount you have outstanding on your existing mortgage. This extra amount can then be used to pay for improvements on your property.
One major benefit of raising funds this way is that all of your mortgage will be on the same introductory product rather than some of it being on a further advance rate, as these can often be higher than introductory rates. Another benefit is that the value of your property should increase after the work's done - assuming there are no sudden decreases in property values.
Will I Need a Solicitor When Remortgaging?
You’ll need a solicitor as you still have to go through conveyancing, although it will be much more straightforward than buying a new property since there won’t be an exchange of contracts or change of ownership.
Will Remortgaging Be Cheaper than Being Transferred onto My Lender’s SVR?
A lender’s SVR is often at least 2% higher than their current products. Many people choose to switch to a new deal with a different lender when their existing introductory deal ends as another lender’s deal will almost certainly always be cheaper than going onto their existing lender's SVR.
We can find you a solicitor to manage the conveyancing part of the process with JC Legal. We choose from an exclusive panel of carefully selected solicitors and conveyancers, saving you time and ensuring you receive excellent service.
It’s easy to overlook your property as part of your finances, but your home is probably the biggest asset you have. Release money from your home with John Charcol's partnership with Key Retirement. Find out more and start the process today.