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Remortgage FAQs

For more advice about remortgaging, please don't hesitate to contact our friendly team.

In the meantime, you might want to have a look at our 'Quick guide to remortgaging and product transfers' article.

What is a remortgage?

A remortgage is when you switch your existing mortgage to another lender 

Why should I remortgage?

Whether you should remortgage or not will depend on your individual circumstances and needs. If you’re looking to reduce your overall outgoings, then a lower interest fixed rate mortgage may be a good option for you. You also might want to remortgage for the following reasons:

  • You’re on a standard variable rate (SVR) and want to move onto a fixed rate deal so you can be certain of your monthly repayments
  • To release equity in your home if it has gone up in value
  • Your current deal is about to end
  • You want to borrow more money (subject to equity levels)
  • You want to switch lenders and maybe change from interest-only to a repayment mortgage
  • You have found a lower interest rate
  • You’re wary of interest rates going up
  • To fund home improvements

What’s a product transfer?

This is where your current lender offers you a further follow-on or replacement mortgage product.

When should I remortgage?

You can remortgage at any time, however it may not always be the right time. You may want to consider:

  • When your current fixed rate mortgage deal ends
  • When you can save money by remortgaging, even after paying arrangement and exit fees.
  • When you own enough equity in your current property.

When shouldn’t I remortgage?

When weighing up whether to remortgage, you need to consider money, timing and your personal circumstances, as well as the following scenarios:

  • If you have a very high early repayment charge and it would be cheaper to wait until the end of the incentive period
  • If you have a very low level of equity in your current property, you may find it difficult to get an improved mortgage deal

How do I remortgage?

You can remortgage with a bank, building society or specialist mortgage lender, and a mortgage adviser with access to several products and lenders will be able to advise you on what’s most suited to your current circumstances.  

How much could I borrow?

How much you can borrow will depend on your individual circumstances and the amount of equity and deposit you have. If you speak to one of our advisers, they'll be able to assess your situation and find out how much you can borrow based on your current situation.

Will I be credit checked?

Yes, your credit score is still very relevant if you’re applying for a remortgage. In a nutshell, the better your credit rating, the more mortgages you’ll have access to, and at lower rates. 

If you don’t know what your credit score is, it’s worth checking online in the first instance, which you can do for free on sites such as Experian and CreditKarma (used to be called Noddle).   

If your score is fair or low, it’s worth speaking to your adviser to see how you can improve your credit score. For example, by registering on the electoral roll if you haven’t already, or apply to rectify any mistakes that are on your credit report. It’s also useful to review what outstanding balances you may have on any credit card or store cards and either pay them off completely, or at least make more than the minimum payments to reduce the amount you owe. Just servicing the interest by making the minimum repayment each month won’t do your credit score many favours.

If you have any car finance or personal loans, ensure that the payments are all up-to-date, and also that you have a recent statement, so you know the balance of what’s outstanding.  This is particularly relevant if you have a car on a Personal Contract Plan (PCP), as the lender may need to see the entire amount of the agreement e.g. the amount you’ve borrowed and any ‘balloon’ payment.

Where can I find out my credit rating?

You can find out your credit rating through Experian and Equifax who are credit referencing agencies and will send you a valid credit report.

What costs are involved in remortgaging?

The costs involved in remortgaging will depend upon your individual circumstances. Possible costs to look out for are:

  • Early repayment charge to your existing lender
  • An exit fee to your existing lender
  • Possible mortgage fees to your new lender
  • Possible fees including valuations, conveyancing and mortgage
  • Potential mortgage adviser fee

Are there any early repayment charges or overhangs?

Many fixed rate and discount rate products include penalties in the small print, meaning that if you decide to exit the product early, you may have to pay what’s called an early repayment charge.

For example, if you took a five-year fix, and then after three years decided that you might want to change lender, you may find that you have to pay a fee to redeem your existing mortgage as you’re still within your current product term.

Some lenders also have ‘overhang’ clauses, which means not only are early repayment charges payable if you redeem your product early, but also for a certain period of time after your product term has finished, for example within six months of the end of the initial product term.

That’s why it’s so important that you understand both if there are any penalties for you to move from your existing lender, but also what early repayment charges there are and if there are any overhangs on your new product.

Can I take the mortgage with me if I move home?

Whilst at the moment it may not be in the plan to move for a long time, sometimes life can throw a curveball. At which point, if you find that you have to move home for any reason, you may have to pay an early repayment charge to redeem your mortgage in order to buy another property.

However, some lenders will allow you to move your mortgage, a process called ‘porting’. This means that if you sell your property and buy somewhere else, you may be able to move across (or ‘port’) your current mortgage to your next property, and then ‘top up’ with any additional borrowing on a separate mortgage.  

If you want to take advantage of the security of a longer term fixed rate, such as a five-year product, but are concerned that you may need to move, then it’s worth asking upfront if the product is portable.

Can I make overpayments?

You’re probably thinking, “Why would I want to pay my lender any more than I actually need to?!”

 

However, by making overpayments to your mortgage, you can potentially save yourself a lot of money in the longer term. By reducing the amount you owe (your outstanding mortgage balance) you pay less interest, because the interest you pay is only calculated on the mortgage balance you have outstanding. You may also find that by overpaying, you can reduce the overall term of your mortgage by years, meaning that you can be debt-free, sooner! 

To achieve this, you may want to make a small overpayment every month, so you don’t miss the additional amount, making it easier to budget for the rest of your household expenditure.  Or, you may want to pay bigger lump sums off of your outstanding balance, for example if you’re paid an annual bonus from work in addition to your normal salary, you may decide you want to use some or all of your bonus to pay a lump sum off your mortgage.   

The thing is, some lenders limit the amount that you can overpay each year, meaning that if you pay off too much either in one go or over a 12-month period, you may be hit with early repayment charges, which isn’t so great. So, if you think that you might want to make overpayments, speak to your mortgage adviser and let them know this up front, so they can recommend the right product for your needs.

Can I take a payment holiday?

Not to be confused with, “Can I just not pay the mortgage next month so I can afford to go on holiday”

However, some lenders do allow you to do this under specific circumstances, for example if you’ve just had a baby and want to take a three-month break from making your mortgage payments while one of you takes time off work.

Although a payment holiday can really help with short term personal cash flow, you do have to pay the money back at some point. Generally, most lenders will just add the amount outstanding from your mortgage holiday payment onto the overall term of your mortgage.  The other thing to consider is that payment holidays may have an impact on your credit score, so it’s not advisable to take one unless you really, really need to.

If it’s something that you think you may need to do at any point during the term of your next mortgage product, again it’s best to let your mortgage adviser know straight away.  That way,  they can look for mortgage products with this kind of flexibility for you, as not all lenders offer this facility.

What do I need to do to get ready for my remortgage or product transfer?

In the majority of cases you’ll need to provide the same information that you would if you were applying for a mortgage to buy a property, as you did the first time round. This catches quite a few people out and can hold up the process as it can take a few weeks to collect the necessary paperwork together. 

Until your adviser has all the necessary paperwork to evidence your income, they won’t be able to proceed with your application, so it really pays to prepare everything you need in advance to ensure that the process runs as quickly and smoothly as possible.

If you’re remortgaging and you’re employed (PAYE), then you’ll need to provide your adviser with

  • Your last three months’ personal bank statement
  • Your last three months’ payslips
  • Your most recent P60
  • Proof of any benefits you receive, for example Child Tax Credits or any child support or spousal support from an ex-partner
  • Two utility bills with your current address (not your mobile phone bill)
  • Passport or your driving licence

If you’re remortgaging and you’re self-employed, the paperwork you’ll need to provide is slightly different:

  • Your last three months’ personal bank statements
  • If you own a limited company, then you’ll need to supply at least two years’ audited accounts (however this can vary between lenders, so do check with your adviser as to what’s required in your specific circumstances).  Normally, the latest accounts can’t be over 18 months’ old, so it’s best if you can to get your year end return completed as efficiently as you can, if you know you’ll be applying for a mortgage, or remortgaging, in the not too distant future
  • If you’re a contractor then you’ll need to show your last 12 months of contracts, and your current contracts, fully signed by all parties. These will need to clearly show your day-rate and that you’re paid in sterling. Obviously not all contracts have an end date, in which case some lenders will accept rolling contracts, but check with your mortgage adviser as to what’s required in your individual circumstances
  • Your last three months’ business bank statements from all of your business bank accounts (not all lenders require this, but best to have them all available when you supply the rest of your paperwork, as it’s possible that even if your lender doesn’t need them, your mortgage adviser may still need to see these as evidence of your income)
  • Your Tax Year Overview for the past three years and your last three SA302’s (also known as your Tax Calculation)
  • Proof of any benefits you receive, for example Child Tax Credits or any child support or spousal support from an ex-partner
  • Two utility bills with your current address (not your mobile phone bill)
  • Passport or your driving licence

As you can see, there’s quite a bit to pull together, but if you plan ahead and start collecting up your documents a few months before you need them, it will help to alleviate any stress and help the process run more smoothly. 

Do I have to wait until my current product ends and I’m on my current lender’s SVR before I can move to another product?

Some lenders will allow you to apply for your next product up to six months in advance, meaning that you can move seamlessly between one product and another. This means you may be able to avoid going onto your lender’s SVR, which could be a higher interest rate than either your existing or new product, so this could save you money. 

This does vary from lender to lender though, so if you want to ‘book your rate in advance’ then make sure you tell them as soon as you can so that they can look at the options available to you. 

What happens if I’ve changed jobs since I last took out a mortgage?

If you were an employee previously and you’ve moved to another employed role (your earnings have stayed the same, or increased), then it shouldn’t be an issue at all. You’ll simply provide your current employers’ details on your mortgage application.

However, if your circumstances have changed significantly, for example if you’ve moved from full-time employment to part-time, or moved jobs and your wages have reduced, then this may affect the amount you can borrow, even if you’re remortgaging.  

If this is the case then it’s best to mention any changes to your circumstances to your adviser as soon as possible, so that they can assess your finances and give relevant advice and guidance on what your options are.

I’ve split up with my partner and need to buy them out of the property – can I do this by remortgaging?

Potentially, yes, however, you’ll need evidence that you earn enough to apply for the mortgage based on just your income alone. 

This means it will depend on how much you need to borrow and how much you earn, to make sure that not only can you take over the current outstanding mortgage balance, but that you can also meet the affordability criteria – if you’re aiming to raise additional capital in order to increase the funds required to meet any settlement you’ve agreed with your ex.

Because we play by the book we want to tell you that…

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

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