Remortgaging – Step by Step

When you took out your first mortgage it may have seemed like a complicated process, so you may be dreading the time when it comes to remortgaging. But the good news is that the process is a lot simpler - and typically cheaper - this time around.

However, don’t expect it to be extremely quick and cost-free. Remortgaging your home can still cost you money and may take a few weeks to go through, but understanding all the various procedures and formalities should hopefully make the process as pain-free as possible.

Step 1: Review your current mortgage deal

The initial stage in the remortgage process is to review your current mortgage. If you think you can get a better deal by moving onto a better rate or moving to a different lender, you’ll need to check the terms of your current mortgage.

It’s fairly straightforward to move your mortgage if you are on the lender’s standard variable rate (SVR), but if you are tied into a deal you can expect to pay early redemption charges. This is usually a set fee plus a percentage of your outstanding debt.

It’s best to speak to your lender to find out exactly what your current redemption penalty would be, but don’t let these exit penalties put you off remortgaging. In many cases, the savings you can make by switching to a lower monthly payment can outweigh any penalties you have to pay.

Step 2: Compare mortgage deals

You don’t always need to move to a different provider in order to remortgage – it’s always worth speaking to your own lender to see if they can simply move you onto a lower rate.

However, don’t disregard all the other products on the market. It may be that another lender can offer you a much better deal, whether it’s finding a mortgage with a lower rate or one that is better suited to your current circumstances.

Make sure you compare like for like when calculating the savings and take into consideration the overall cost of the mortgage over the term as well as any arrangement and valuation fees you may be expected to pay.

The right mortgage for you isn’t always the cheapest mortgage – it will depend on your circumstances and they all have their advantages and disadvantages.

Speaking to a mortgage broker will take the hassle out of the search for you. With access to the whole of the market, an independent broker can search through a wide range of mortgage products to find the best deal for you and can also help you with the application process.

Speak to a mortgage broker today

Step 3: The application process

Once you’ve had a look at the current deals available, reviewed your current mortgage and weighed up the pros and cons of remortgaging, then you’re probably in a position to take the next step and apply for your remortgage.

Here’s a summary of the process you’ll need to go through:

• Make a formal application with your new lender, either over the phone or in person
• A credit check will need to be conducted – this will remain on your credit file, but once this has been done and everything is clear, you’ll typically be given a decision in principle from the lender

Read more: What is a Decision in Principle

• You’ll need to provide details of your employment and salary and may need to provide evidence of any other incomings or outgoings. If you’re self-employed, you’ll need to provide details of your trading accounts
• If you’re remortgaging with a new lender, an up-to-date valuation of your property will be required. If you’re staying with the same lender but moving onto a lower rate this can usually be avoided, as they often just use the House Price Index to estimate the current value of your property
• If you’re switching to a new lender, your solicitor will need to carry out local searches and check the title deeds of your property
• Once all the above have been completed, the funds will be released from your new lender, which are used to repay your previous lender

How much will the remortgage process cost me?

A remortgage doesn’t usually cost you as much as taking out your first mortgage, but there are plenty of costs you need to be aware of – although depending on the circumstances you shouldn't need to pay all of them.

For example, as you already own your property, there’s no need to pay Stamp Duty again, as this is just a one-off cost each time you buy a new property. The expenses you will need to consider include:

• Arrangement fees from the new lender         
• Valuation fees (not always needed when staying with the same lender)
• Legal & search fees (as above)
• Early redemption penalties
• Mortgage broker fees (if applicable, some brokers will charge an upfront fee, others provide their services to customers free of charge and will gain commission from the mortgage provider upon a sale)

How long is all this expected to take?

The simplest remortgages - i.e. switching to a lower rate with the same lender - can take a few weeks just to complete all the necessary the paperwork, but it can take longer if you are switching providers and you are waiting on valuations and searches to take place.

However, once you see the benefits of remortgaging you will hopefully feel rewarded for your efforts.