is when you move your mortgage to a new lender. This guide looks at why you may want to remortgage, the costs involved, the types of mortgages available and what information lenders ask you to provide.
Most people remortgage when their current mortgage deal ends to save money, but you may want to for other reasons. Here are some of the reasons:
If your circumstances have changed such as your income has risen or you inherit money, you may want to pay more towards your mortgage or pay off a lump sum to reduce your mortgage term.
If your mortgage payments are high, you may want to extend your mortgage term to lower the amount you pay each month.
Extending the term will increase the amount you pay in interest over the life of the mortgage, so it's important you decide if it's a suitable option.
If you're worried about the interest rate going up, you may want the security of knowing the amount you pay each month won't change by getting a fixed rate mortgage.
Potentially, you may also opt for a tracker mortgage. Reduce your mortgage rate and monthly repayments by tracking the Base of England base rate for a specified period of time.
An interest-only mortgage is where you pay the interest on the loan each month but not the loan.
If you are worried that you won't have the money to back your loan you could switch to a repayment mortgage.
If the value of your property has gone up, you may want to free up some equity for home improvements, by borrowing a larger amount than on your current mortgage, in order to consolidate other debts or for a big purchase such as a car.
Borrowing more will increase your mortgage payments, so it's important you carefully consider if it's a suitable option.
The cost of remortgaging can add up so you need to ensure you're aware of the charges and fees involved. There are usually charges and fees for leaving a mortgage early and often fees for taking out a new one.
You may pay an early repayment charge to end your current mortgage arrangement. The charge normally applies during the introductory deal period when you're on a fixed, discount or tracker rate. It's usually around 1 - 5% of the mortgage loan. Check your current mortgage documentation to understand what fees you may have to pay.
Some lenders may also charge an exit fee when you remortgage.
If your lender charges such a fee, it is likely to need to be paid upfront to reserve your remortgage deal. If the mortgage does not complete there may be instances where this is not refunded. Please check with your mortgage provider.
A fee is paid when the mortgage is completed and can be either added to the mortgage or paid by you.
You may have to pay a valuation fee so the lender can check your property is worth the amount you want to borrow. The fee could range between £150 and £1500, depending on the value of the property.
The types of remortgage products usually available are:
With most mortgages,once the initial deal period has ended, your mortgage reverts onto a lender's standard variable rate, a rate set by the lender which can go up an down, At TSB we currently offer
fixed rate and tracker rate remortgages.
The amount you can borrow will depend on your annual income and personal circumstances. It will be based on what the mortgage lender thinks is a sensible amount to lend to you and what you think you can afford.
You can use the
TSB mortgage calculator
to get an idea of the amount TSB could lend you.
The lender will want to check your credit history even though you are borrowing for a property that you already have. During the application process, the lender will request data from credit reference agencies. You can get hold of your credit file from any of the three main credit rating reference agencies, Experian, Equifax or Callcredit.
An application will need to be completed in person, online, via telephone, or by post. Lenders must assess your suitability for a remortgage by asking for details of your outgoings, income and age
Lenders will usually ask you to provide the following paperwork:
Your property is revalued.
The conveyancer will carry out legal checks on the property known as searches and arrange for you to sign any necessary documentation.
Completion of remortgage.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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If you are a first time buyer, home mover or looking to remortgage, you can apply for a mortgage promise
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