Remortgaging Guide: When and How to Switch
Remortgaging is one of the most straightforward ways to cut your mortgage payments or release equity from your home. Yet many UK homeowners drift into their next deal without checking whether it's the right move for their finances. Others don't remortgage at all, staying on expensive standard variable rates long after they should have switched.
This guide covers everything you need to know: when to remortgage, how much it costs, what the process involves, and how to avoid the common pitfalls that cost borrowers thousands.
What is Remortgaging?
Remortgaging simply means replacing your current mortgage deal with a new one, usually from a different lender (though you can remortgage with your existing lender too). You keep the same property and the same loan amount, but the interest rate, term, or payment structure changes.
Most remortgages happen at the end of a fixed-rate deal. When your initial 2-year or 5-year fixed rate expires, your lender moves you onto their standard variable rate (SVR), which is typically much more expensive. Remortgaging lets you lock in a new fixed rate before that happens.
You can also remortgage to release equity, switch to a better deal mid-contract (if you're willing to pay an early repayment charge), or consolidate debts.
When Should You Remortgage?
At the End of Your Current Deal
The most common time to remortgage is in the three months before your fixed rate ends. Your lender should contact you to remind you about this window. It's the safest time to switch because you won't incur early repayment charges.
Currently, with Bank of England base rate at 3.75%, the mortgage market remains competitive but rates are higher than the historic lows of recent years. The average 2-year fixed rate stands at 6.59%, whilst 5-year fixed deals are available at around 3.97%. If you're coming off a very cheap deal from 2021 or 2022, expect to pay more, but it's still worth shopping around rather than accepting your lender's renewal offer.
When Rates Have Dropped Significantly
If mortgage rates fall substantially after you've locked in, you might want to remortgage early, even if you'll pay an exit fee. Calculate whether the savings from a lower rate will outweigh the cost of exiting your current deal.
For example, if you're paying 5.5% on a £200,000 mortgage and rates drop to 4.0%, a one-percentage-point saving could be worth around £2,000 per year. An early repayment charge of £2,000-3,000 might pay for itself within 12-18 months, especially on a longer mortgage term.
When You Need to Release Equity
House prices across the UK have risen 2.4% over the past year, and the average home is now worth £270,259. If your property has appreciated, remortgaging gives you access to that equity without selling. You can borrow more against the property's new value and use the cash for renovations, debt consolidation, or other needs.
This strategy only works if your equity has genuinely increased. Releasing equity increases your total debt and monthly payments, so only do this if you have a clear, cost-effective use for the money.
When You Want to Change the Mortgage Term
Remortgaging isn't just about chasing better rates. If you want to shorten your mortgage term to pay it off faster, or extend it to reduce monthly payments during a difficult period, remortgaging lets you do this. Be aware that extending your term increases the total interest you'll pay over the life of the loan.
How Much Does Remortgaging Cost?
Remortgaging isn't free, but the costs are usually lower than getting your first mortgage. Here's what you'll typically face:
- Arrangement fees: Usually £0-1,500. Some deals are fee-free, though these often come with slightly higher interest rates.
- Valuation: £150-500, depending on property value and whether your lender requests a full survey. Many lenders offer free or reduced valuations if you remortgage with them.
- Legal fees: £150-400. Your solicitor handles the paperwork and checks there are no issues with the property or title.
- Early repayment charge (if exiting a deal early): Usually 1-5% of the outstanding balance. On a £200,000 mortgage, this could be £2,000-10,000.
- Booking fee: Sometimes charged by lenders to lock in a rate. Usually £20-100, sometimes refundable if you don't complete the remortgage.
Total costs typically range from £500-2,500 for a straightforward remortgage within your tie-in period. Even with these fees, if you're cutting your rate by 1-2%, you'll save money within a year or two.
Step-by-Step: How to Remortgage
Step 1: Check When You Can Remortgage
Look at your mortgage paperwork or log into your lender's online portal to find your end date. Most lenders let you remortgage up to 120 days before your deal expires. If you're mid-contract and want to switch, check your early repayment charge first. It might not be worth it.
Step 2: Get Your Property Valued
Your new lender will need to value your property. Many offer free or heavily discounted valuations as part of their remortgage offer. The valuation usually takes 5-10 working days. It's a straightforward process, though the lender's valuer may need access to your home.
Step 3: Compare Deals and Get an Agreement in Principle
Don't just accept your current lender's renewal offer. Shop around with at least three other lenders. You can compare rates online, but you'll need to apply formally to get an Agreement in Principle (AIP), which locks in a rate for a set period, usually 21 days to 3 months.
An AIP isn't a mortgage offer, but it tells you what you'd be accepted for and at what rate, without a hard credit check (in most cases).
Step 4: Instruct a Solicitor
You'll need a qualified conveyancing solicitor to handle the legal side of remortgaging. They check the title, review documents, and ensure everything's above board. Many high street solicitors offer remortgage services. You can also use specialist conveyancing firms, which are often cheaper. Budget £150-400 depending on complexity.
Step 5: Accept the Mortgage Offer
Once you've chosen a lender and they've completed their checks, they'll issue a formal mortgage offer. This sets out the exact terms, rate, amount, and any conditions. Read this carefully. You'll need to accept it within the deadline stated on the offer.
Step 6: Complete the Legal Work
Your solicitor liaises with your current lender, arranges the discharge of your old mortgage, and ensures the new lender's funds are released on time. This usually takes 7-14 days from offer to completion. Your solicitor will contact you when funds are due to transfer.
Step 7: Completion
On completion day, your new lender's money arrives, your old mortgage is paid off automatically, and you're switched to your new deal. You might see a brief payment gap, but your new lender will send you payment details. Your new mortgage payments begin on the date stated in your offer.
The whole process typically takes 4-8 weeks from initial application to completion, though it can be quicker with efficient lenders.
Should You Use an Estate Agent or Mortgage Broker?
For remortgaging, you don't need an estate agent (unlike selling your home), but a mortgage broker can be invaluable.
Brokers have access to deals across the entire market and can compare hundreds of products in minutes. They handle the paperwork, chase documents, and often secure better rates than you'd find shopping independently. Many brokers charge nothing upfront, instead taking a commission from lenders.
Even if you're not moving home, a good broker more than earns their value by securing a rate 0.25-0.5% lower than you'd find alone. On a £200,000 mortgage, that's £500-1,000 per year in savings.
However, if you're planning to sell your home in the near future, you should think carefully about your remortgage strategy. The mortgage market moves quickly, and if your property has appreciated, your lender may want a fresh valuation anyway. This is one area where professional guidance makes a real difference. Getting a free property valuation from a good local agent can give you clear insight into what your home is now worth and how your equity position has changed. You can compare experienced local agents on AgentSeeker to find one who understands your market.
Remortgaging vs. Selling: A Quick Note
If you're tempted to move home partly because you want a better mortgage deal, remortgaging is almost always cheaper. Selling involves stamp duty, agent fees (typically 1-3% of sale price), legal costs, and moving expenses. For a £270,000 property, selling costs around £15,000-25,000.
Remortgaging costs a fraction of that and takes less time. Unless you genuinely need a different home, remortgage first.
Mistakes to Avoid
Accepting the First Offer Without Shopping Around
Your current lender's renewal offer is often the most expensive option available. They know you might not be bothered to switch, so they charge more. Always get at least three competing offers before deciding.
Ignoring the Fine Print
Check whether the deal has early repayment charges, what the standard variable rate is if you don't remortgage again, and what fees apply. Some deals look cheap because they charge £1,500 upfront, others because they have higher rates.
Remortgaging Too Close to the End Date
If you wait until your deal expires, your lender moves you to their SVR, which is typically 5-6% or more. You can usually remortgage from 120 days before expiry, so do it early. If the process drags, you might end up on SVR briefly, which costs real money.
Overlooking Early Repayment Charges
If you're mid-contract and tempted to switch, calculate the total cost: early repayment charge plus new deal arrangement fee. Compare this to the interest you'd save. Sometimes staying put is actually cheaper.
Not Reviewing Your Financial Situation
When you remortgage, you have the chance to reassess everything: your term length, whether to fix or track, whether to release equity. Many people just copy their old deal onto new terms without thinking. Take 30 minutes to consider whether your current strategy still makes sense.
Key Takeaways
- Remortgage every 2-5 years or whenever rates fall significantly.
- Always shop around. Your lender's renewal offer is almost never the best option.
- Calculate the cost of remortgaging against the interest savings. It usually pays for itself within 1-2 years.
- Start the process 3-4 months before your deal ends to avoid ending up on a standard variable rate.
- Consider using a mortgage broker. Their expertise and market access typically save you far more than any fees they charge.
- If you're also thinking about selling or moving, plan carefully. The right time to remortgage might coincide with getting professional advice on your home's value and market position.
Final Thought
Remortgaging is one of the most straightforward ways to improve your financial position as a homeowner. It requires a bit of legwork and organisation, but it almost always pays off. Start early, compare properly, and don't settle for the first offer that comes your way. Your future self will thank you for it.