Remortgaging

The reasons people choose to remortgage generally fall into two categories: to get a better deal or to raise funds from the equity in their property.

The interest rate you are initially offered will depend on the loan-to-value (LTV) ratio. The higher the LTV, the more you can expect to pay. As you pay down your mortgage, and the value of your property rises, the LTV changes. There’s a tipping point when you enter a lower category, meaning you might well be able to get a better deal by remortgaging to pay less interest on the loan.

Alternatively, you might be on a fixed-rate or other mortgage deal that is coming to an end and want to get a better deal than the standard variable rate (SVR) mortgage your current lender offers.

Remortgaging can also release equity that has built up in the property, meaning you can raise funds for home improvements, large purchases, or even to consolidate other debts.

If you would be terminating your current mortgage deal early, check the terms, as there might be early repayment charges attached. They, and any fees attached to a remortgage deal, need to be taken into account with accessing any savings that might be made from moving to the new deal.

You can expect the process to take a while to complete, so if you have a deal that’s coming to an end or you want funds for a particular date, you need to allow enough time. As a general rule, start looking three or four months beforehand.

If your financial circumstances are reduced, check both your credit report and the lender’s current criteria to make sure there are no obstacles to you getting a new deal.