When to Remortgage: A Guide to Getting the Best Deal
Your mortgage is likely your biggest financial commitment, so it makes sense to ensure you’re always getting the best possible deal. Remortgaging – switching your existing mortgage to a new product, either with your current lender or a different one – can save you thousands of pounds over the life of your loan. But knowing when to remortgage and how to navigate the process can feel complicated. Let’s break it down.
When Should You Consider Remortgaging?
Your Fixed-Rate Deal Is Ending: This is the most common reason homeowners remortgage. If you’re currently on a fixed-rate mortgage, you’ll have been enjoying stable monthly payments for the past two, three, five, or even ten years. When that deal ends, you’ll automatically roll onto your lender’s Standard Variable Rate (SVR), which is typically much higher – sometimes 2-3% more than competitive fixed rates.
For example, on a £200,000 mortgage, moving from a 4% fixed rate to a 7% SVR could increase your monthly payments by around £350. That’s over £4,000 extra per year! Starting to look for remortgage deals three to six months before your current deal ends gives you time to secure the best rate.
Interest Rates Have Dropped: Even if you’re still within a fixed-rate period, significant drops in interest rates might make it worthwhile to switch. You’ll need to weigh any early repayment charges against the potential savings, but our advisors can calculate whether switching makes financial sense for your situation.
Your Circumstances Have Changed: Perhaps you’ve received a promotion, cleared other debts, or significantly improved your credit score since taking out your original mortgage. These changes could qualify you for better rates. Alternatively, if you’ve built up substantial equity in your property through house price growth or overpayments, you’ll have access to lower loan-to-value (LTV) mortgages with more competitive rates.
You Want to Borrow More: Many homeowners use remortgaging as an opportunity to release equity for home improvements, debt consolidation, or other purposes. If your property has increased in value, you might be able to borrow additional funds at mortgage rates, which are typically lower than personal loans or credit cards.
Understanding the Costs Involved
While remortgaging can save you money, it’s important to understand the costs involved:
Early Repayment Charges (ERCs): If you’re still within a fixed or discounted rate period, your current lender might charge a penalty for leaving early – typically 1-5% of the outstanding mortgage. These charges usually decrease as you near the end of your deal.
Valuation Fees: Your new lender will want to value your property, though many lenders now offer free valuations as an incentive. This typically costs £250-£1,500 if you do need to pay.
Legal Fees: Switching to a new lender involves conveyancing work. Many lenders offer free legal services for remortgages, but you should still budget for potential costs.
Arrangement Fees: Some mortgage products charge arrangement or booking fees, ranging from nothing to £2,000 or more. Sometimes you can add these to your mortgage, though this means paying interest on them over the mortgage term.
Broker Fees: Many mortgage brokers charge for their services, though at Akers Pritchett, we pride ourselves on offering transparent advice with clear fee structures discussed upfront. Often, the money we save you far exceeds any fees involved.
How to Get the Best Remortgage Deal
Start Early: Begin researching remortgage options at least three to six months before your current deal ends. This gives you time to find the best product and complete the application without rushing. You can typically lock in rates up to six months in advance.
Check Your Credit Score: A good credit score opens doors to the most competitive rates. Before applying, check your credit report for any errors and take steps to improve your score if needed. Simple things like registering on the electoral roll and ensuring all bills are paid on time can make a difference.
Consider the Bigger Picture: The lowest interest rate isn’t always the best deal overall. A mortgage with a slightly higher rate but no arrangement fees might work out cheaper than a low-rate product with expensive upfront costs. This is where working with experienced mortgage advisors becomes invaluable – we’ll calculate the true cost over the full term.
Explore the Whole Market: High street banks represent just a fraction of available mortgage products. Specialist lenders often have competitive rates for specific situations, and some exclusive products are only available through brokers. Our team compares deals from across the market to find options perfectly suited to your circumstances.
Think About Your Future Plans: How long do you plan to stay in your current property? If you’re thinking of moving within the next few years, a shorter fixed-rate term with lower fees might make more sense than a longer fix. Conversely, if you’re settled long-term, locking in today’s rates for five or even ten years could provide valuable certainty.
The Remortgage Process
Once you’ve decided to proceed, here’s what typically happens:
First, we’ll review your current mortgage and circumstances to identify the best products for you. We’ll then submit your application to the chosen lender, who’ll conduct credit checks and arrange a property valuation. If everything looks good, you’ll receive a mortgage offer.
Your solicitor will handle the legal work, which is usually much simpler than your original purchase. There are no property searches needed since you already own the home. On the completion date, your new lender pays off your existing mortgage, and you start making payments to them instead.
The entire process typically takes 4-8 weeks, though it can be faster or slower depending on various factors. Throughout, our team keeps you updated and coordinates with all parties involved.
Should You Stay with Your Current Lender?
Product transfers – switching to a new deal with your existing lender – can be quicker and sometimes cheaper since there’s minimal legal work. Your current lender might offer you retention deals not available to new customers. However, they’re not always the most competitive option. We always compare what your current lender offers against the wider market before recommending the best route forward.
Protection Alongside Your Remortgage
When remortgaging, it’s an ideal time to review your protection arrangements. Life insurance, critical illness cover, and income protection ensure your mortgage payments are covered if something unexpected happens. Your circumstances may have changed since you first bought your home, so it’s worth ensuring your cover still meets your needs.
Ready to Explore Your Options?
Whether your fixed rate is ending soon, you’re looking for better rates, or your circumstances have changed, remortgaging could save you significant money. The mortgage market changes constantly, and what was the best deal two years ago might not be competitive today.
Our team serving Nottingham, Derby, and Leicester has helped hundreds of homeowners secure better remortgage deals. We’ll review your current situation, explain all your options, and handle the entire process from start to finish. Get in touch today for a free, no-obligation chat about your remortgage options. We’ll give you a clear picture of what’s available and what savings you could achieve.
Frequently Asked Questions
How far in advance should I start looking to remortgage?
We recommend starting your remortgage search three to six months before your current deal ends. This gives you plenty of time to find the best product, complete your application, and lock in competitive rates before rolling onto your lender’s expensive Standard Variable Rate. Many lenders allow you to secure rates up to six months in advance, protecting you if rates increase before your current deal ends. Starting early also means you’re not rushing decisions or settling for less competitive products due to time pressure.
Will remortgaging affect my credit score?
Applying for a remortgage involves a hard credit check, which can temporarily lower your credit score by a few points. However, this impact is usually minimal and short-lived. The bigger issue is making multiple applications to different lenders, as each hard search appears on your credit file and can make you appear desperate for credit. This is another reason to work with mortgage advisors – we can assess your situation and approach the most suitable lenders, minimizing unnecessary credit checks. Once your remortgage completes, maintaining regular payments will actually help build your credit score over time.
Is it worth remortgaging if I only have a small amount left to pay?
It depends on your circumstances and how much you could save. If you’re on an expensive Standard Variable Rate and have several years left on your mortgage, switching to a better deal could still result in worthwhile savings, even with a smaller loan amount. However, if you only have a year or two remaining and you’re already on a reasonable rate, the fees involved might outweigh the savings. We’ll do the calculations for you and give you honest advice about whether remortgaging makes financial sense. Sometimes, simply making overpayments on your current mortgage is the better option for those nearing the end of their term.
Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.