If you’re looking to review your remortgage options, then you’re probably wondering how much you can borrow.
Whether you’ve recently changed jobs, lowered your hours, or perhaps need to borrow money to extend your house for a home office, it can be tricky to understand how much to apply for.
You would’ve thought that the answer to this is to do with how much you earn, which it is, but your remortgage success also depends on a lot of other factors.
How Much Can I Borrow?
Companies who lend you money will multiply your income or joint income to work out what they’re willing to lend you.
How many multiples is dependent on rules set by each company who lends money, which they keep secret. Overall, it’s common for banks to let you borrow 4 - 5 times your annual salary.
So, if you earn £35,000 a year, you can afford a remortgage for at least £140,000, right?
In theory, yes, but a bank won’t just hand over the cash based on a multiple of your annual salary. There are other factors they need to consider like your LTV (loan-to-value) and affordability. Your annual salary is, however, a great place to start.
Remortgage Borrowing Deposit
How much you can borrow when you remortgage is also based on borrowing against the value of your house, which is called the LTV (loan-to-value).
Lenders need to assess what level of risk your property and you represent, viewing a person with a lower LTV percentage as less risky. If your property is valued at £200,000 and you’re looking to borrow £150,000, then your LTV would be 75%.
You don’t need a deposit with a remortgage like you did with your first mortgage, you need to show how much equity you have.
Your equity is not how much you have paid off your mortgage - it's the current market valuation minus how much you owe.
So, the amount you can borrow when you remortgage is concerned with your income, your equity and the level of risk you represent to a lender.
So far so good, but it’s also important that you can afford to repay the remortgage each month, which is where affordability comes in.
Can I Afford to Remortgage?
Whether you can afford your mortgage payments will be assessed by the lender when you apply for a remortgage. You can use our repayment calculator to understand what your monthly repayments might be.
One of our mortgage advisers can also help you to understand what you can borrow versus what you can comfortably afford to pay each month -- they'll also discuss your lender options with you.
It’s also worth noting that your credit history of paying on time each month on your mortgage and other bills impacts your ability to obtain a remortgage. If you’re concerned, it’s best to be upfront with the mortgage adviser, as they can choose lenders who are more likely to lend you money.
Now you have roughly worked out what you can afford to borrow, you’ll need to look at what remortgage rates and remortgage deals are available. You can do this yourself by looking at our remortgage best buys and by getting in touch with one of our advisers on 0330 433 2927.
It’s important to look at the cost of borrowing (interest rate), any fees, the overall cost of borrowing (APRC), flexibility to overpay and take mortgage payment holidays, any incentives like cashback and free valuations, and who the product is available to. Your John Charcol mortgage adviser will help you find a deal suitable to your needs and circumstances.
Some remortgage products have a minimum and maximum amount and restrict the rate to people who have a lower LTV. In general, the lower the LTV you have, the cheaper the remortgage rate you can access.
How Long Does It Take to Remortgage?
The remortgage process can take 4 - 8 weeks if there are no complications along the way.
All lenders that are regulated by the Financial Conduct Authority (FCA) have rules and procedures to protect you, which means that you’ll be taken through a process to ensure that you understand the financial obligations and details of the remortgage.
You’ll receive remortgage key facts documents, which details everything you need to know about the remortgage deal you’re interested in. You’ll need to sign and return documentation to confirm that you’d like to proceed with the new remortgage.
Dependent on whether you chose to stay with the same lender or change to a new lender will determine the evidence required and remortgage process.
A remortgage adviser can help you to understand the remortgage process from understanding how much you can borrow to application and beyond. To get in touch with one of our expert advisers today, give us a call on 0330 433 2927 or enquire online.
Once you have found the remortgage rate for you and checked that you can afford to repay the monthly repayments, you’ll need to apply for your remortgage. It’s important to consider the benefits of staying with the same lender in addition to moving to a new lender, as there are pros and cons.
You’re likely to have less or no fees with your existing lender to transfer you on to a new product, but as an existing customer, you will not be offered new customer remortgage deals, so your rate might be higher.
You’ll also have a track record with your existing lender, so they don’t usually ask for as much paperwork and proof of identity -- as you would have done this initially.
The benefit of moving to a new lender for your remortgage is the low initial cost of borrowing (interest rate) which is reserved for new customers only. You might also be able to access new features, flexibility, and incentives.
However, new customer remortgages often have fees and costs associated with them and you’ll have to provide paperwork to prove who you are, your income, and various other documents.
Compare the latest remortgage rates and deals with our comparison tool and discover how this type of mortgage works, the process and if it’s suitable for you.
Debt Consolidation Remortgage
On this page we go through debt consolidation remortgages, how they work, when you can do it, the pros and cons, which lenders are available and more.
Remortgaging means to switch to a new deal with a different lender but stay in the same property. Learn about remortgage costs, valuations and see our advice.
9 Reasons to Remortgage
Read our nine reasons why you should consider remortgaging your home. You can save a lot of money on remortgaging, so make sure you get the best deal.
On this page you’ll find our detailed mortgage terminology glossary. There’s a lot of jargon out there but we’re here to make it easy.
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Great service and advice, the specialist team Harry and Emily talked me through a range of options before we decided on the best approach for bridging finance. They really know their market and are extremely client- responsive. SCPosted
Finally in our forever home thanks to the first class service provided by Jordan Tomlinson and John Charcoal. A complicated expat mortgage with many other brokers turning us down at the first phone call. Jordan took her time to understand our personal circumstances and offered much needed reassurance and support throughout every step of the way. Forever grateful!!Posted
Kevin Lachasseigne and Fiona Allan were amazing. My mortgage journey was challenging as the owner had made changes in the property without having building regulations certificate and the mortgage was initially declined. The estate agent was not helpful so I had to work with the owner directly to get this done. To make things worse, the lender was giving us conflicting instructions every day, delaying the process to the extend that the owner put the house back in the market. Fiona and Kevin escalated the matter with a formal complaint, going the extra mile liaising with the senior team of the lender, while trying to reassure the estate agent. We finally got the mortgage approved 6 months later. Everyone thought that this was a lost case at some point, but it was our determination, the hard work and resilience of Fiona and Kevin who made this happen. It was very stressful for all of us, but I can imagine how draining is to go through this for every client. I really can’t thank them enough for all the efforts and care during this journey that got me finally in my first home!Posted
Excellent support from Shaahid Quinn and Katherine Hollyoake. My mortgage setup wasn't easy as i was overseas for the majority of the time and they made the process as easy as possible and secured a product that I'm very happy with, well worth the cost.Posted
Bruce Anderson, our long-standing mortgage adviser, was able to expedite two mortgage renewals both of which were completely without hassle, even in this ever-changing market. It speaks volumes about having an adviser who knows and understands his clients.Posted
We were delighted with the advice we received from Randeep. The remortgage process on the flat was straightforward and we completed as planned. Thank you Randeep and the team at John Charcol.Posted
John Charcol have been amazing, they have the specialest knowledge, expertise and infrastructure to make the purchase of your dream property possible. My deal was complex and challenging, yet JC presented it in a simple way that made perfect sense. They provided support through the whole of the process and communicated with all parties quickly and efficiently. I can't recommend enough anyone considering John Charcoal to assist in a property purchase. There is a reason they one of the best mortgage brokers in the UK. wishing my best to all the team at John Charcol.Posted
You guys are great! Thank you Perfect Agent for connecting us!Posted
Thanks to Jordan and Holly for tirelessly progressing my mortgage. Exceeded my expectations by some way.Posted
The team at John Charcol are just brilliant Emily Gould and Tiara Hardy go beyond the extra mile . They do what it takes to get everything across the line . I would highly recommend them both Phenomenal service and support Thank you Tiara Emily and the teamPosted
There are many valid reasons to remortgage. If you’re considering remortgaging your home but need help finding the right option for you, contact John Charcol. Our team of experienced mortgage advisers can recommend a range of remortgage options to suit you. Request a call back or call us on 0330 433 2927 to get in touch.
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- What is a Remortgage and Why Do I Need One?
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