Remortging guide

Remortgaging 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.

Why remortgage?

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:

Pay off your mortgage early

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.

Extend 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.

Fix your mortgage payments

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.

Tracker 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.

Interest-only mortgage

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.

Refinance

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.

Remortgaging costs

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.

Fees paid to your current lender

Early repayment charge

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.

Exit/redemption fee

Some lenders may also charge an exit fee when you remortgage.

Fees paid to your new lender

Booking fee

If your lender charges such a fee, it is likely to need to be paid by you 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.

Product fee

A fee is paid (where applicable) when the mortgage is completed and can be either added to the mortgage or paid by you.

Valuation fee

You may have to pay a valuation fee so the lender can check your property is worth the amount you want to borrow.  This is to identify whether there are any problems with the property before they lend against it. The fee could range between £150 and £1500, depending on the value of the property.

Legal fee

You may pay a fee for the legal work needed to remortgage your property.

Benefits of moving your mortgage to TSB

• Free standard legal work when borrowing up to £999,999
• No valuation fee for mortgages up to £1 million
• No Exit Fee on TSB mortgages (Early Repayment Charges may apply)
• No booking fee
• No Product fee

Lending is subject to status and lending criteria. Must be a UK resident and 18+.

Remortgage products

The types of remortgage products usually available are:

• Fixed rate mortgages where monthly payments are fixed for a set period of time
• Tracker mortgages where payments can go up and down depending on the movement of the Base Rate set by the Bank of England
• Capped rate mortgages where payments can't go above a certain amount but vary depending on an interest rate set by the lender
• Offset mortgages where your savings are placed in an offset savings account and help reduce the interest you pay on your mortgage debt

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.

How much can I borrow?

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.

Credit history

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 TransUnion.

Steps involved in applying for a remortgage

1 - 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.

2 - Lenders will usually ask you to provide the following paperwork:

• proof of identity, your passport and National Insurance number
• proof of address for the last three years (make sure you're on the electoral role at your current address)
• payslips for the last 3 months
• bank statements for the last 3 months
• details of any loans you currently have outstanding, including student loans
• mortgage statements for the last year, if you're moving lenders
  • You will receive a Mortgage Illustration for any mortgages you are advised on. This provides you with all the information you need to know about the remortgage product
  • Your application is processed

3 - Your property is revalued.

4 - The conveyancer will carry out legal checks on the property known as searches and arrange for you to sign any necessary documentation.

5 - Completion of remortgage.