Should I remortgage?

Why should you remortgage

When you should remortgage

When is it best not to remortgage

Can you remortgaging early

Your fixed rate mortgage is coming to an end – when your mortgage contract comes to an end, you will move from your fixed interest rate onto your mortgage providers standard variable rate (SVR) which is usually a much higher rate. Remortgaging allows you move onto another contracted rate, which is usually cheaper than the SVR.

Changes in interest rates – if interest rates rise and you are on a variable mortgage, you may want to switch to a new deal for security, as with a fixed rate you know exactly what you will be paying each month. Conversely, if the interest rates are decreasing, you may also want to remortgage to take advantage of cheaper deals to bring down your monthly repayments.

You’re looking to release equity and increase your borrowing amount, if you have equity saved up in your house, you can remortgage to gain access to this money, which you could then use to renovate or buy another property, for example.

Your current mortgage deal has restrictions that no longer suit your situation – every mortgage has its own rules and conditions, which can be limiting if your own situation has, or is about to change. Conditions such as, the ability to make over payments, moving house with your mortgage, or being able to default payments all differ with providers and their deals and so if your situation has changed you may want to remortgage to change what you can do

Buy another party out, or add a party to the title when transferring equity – if you are making changes to the title of deeds with the land registry, you will likely need to remortgage, as your mortgage lender will need to consent to the changes and update the mortgage with the new details. Our video guide to transfer of equity explains this process in more detail.

If you’re on a fixed term mortgage contract, you should look at your remortgage options, six months prior to the end of your mortgage term. Remortgaging can take a couple of months and if you don’t arrange a new deal to start when your current term ends, you will end up on a standard variable rate, which will not be a favourable rate.

If your home has substantially increased in value, you can remortgage to take advantage of a lower loan to value (LTV) rate. A lower LTV means you may be able to get better interest rates through remortgaging and therefore your monthly repayments may decrease.

If you need to add or remove someone from the title deeds, which is known as transferring equity, you will need to remortgage.

If the value of your home has dropped, remortgaging may not make sense, this is because you’ll have less equity in the house, so your LTV ratio will be higher. When you have a higher LTV ratio, you will get a less advantageous mortgage rate and therefore, remortgaging may cost you more money. To work out how much equity you currently own, all you need to do is subtract the amount remaining on your mortgage from the value of your property.

If you don’t have much left to repay on your mortgage, the savings you can make by changing deals may be outweighed by the fees and costs involved in switching.

If you have had credit problems since you last took out a mortgage you may find it harder to secure a mortgage, and it’s likely you will be charged a higher rate.