Remortgaging is when you get a new mortgage with a different provider. Switching your current mortgage plan to a new deal could help you to:
- Lower your monthly payments
- Overpay on your mortgage
- Get a more flexible deal
Reasons for remortgaging
Before you start changing your deal, think about what you want to get out of it. There are a number of reasons people chose this route, such as:
- Current mortgage has ended – When your current deal ends, your lender may place you on a standard variable rate (SVR). This may be a higher interest rate than you’re currently paying.
- Get more flexibility – A new mortgage deal could allow you to overpay on your mortgage. Flexibility comes if you switch to a mortgage that has no fees or charges for overpaying, which obviously brings down the amount on your mortgage quicker.
- Value of your home has risen – If the market value of your home has risen, you may be entitled to lower interest rates and smaller monthly payments.
How early can you remortgage?
You can remortgage at any time during your mortgage term. But there are things to think about if you’re looking to do so, including:
- Early repayment charges – If you switch mortgages before your current plan ends, you may have to pay a fee to your current provider.
- Change in rates – Interests rates can go up and down, which can affect your payments if you switch from a fixed to variable rate.
The legal work to change your mortgage deal may take a few months, in which time you’ll be placed on a standard variable rate of interest (SVR). Standard variable rate is the default interest offered by lenders and is likely to be higher than the interest on a mortgage deal, so might cost more for this period.
Have a look around before you commit to a new deal – you can remortgage up to six months before your current deal ends. You won’t be able to remortgage before your deal ends without paying an early repayment charge. You can arrange a new mortgage deal to kick in once your term has come to a close to avoid this.
If you arrange a mortgage deal before your existing deal runs out, you'll avoid been placed onto a standard variable rate.
How often can you remortgage?
You can remortgage your home as often as you want. Some people choose to hold off until their current deal ends, they’re out of the introductory period or they’re moving house.
As you’ll likely have to pay to remortgage – especially if you’re doing it early – it could cost more than the money you’ll save by switching to a better deal.
How much does remortgaging cost?
When switching deals, there are some expenses to keep an eye out for on top of your new monthly repayment plan. These include:
- Early repayment charges – If you end your current mortgage deal early or before the end of the introductory period, you might have to pay a percentage of the amount still to pay on your mortgage.
- Valuation charges – A lender might charge you to carry out a valuation of your home, which may be needed if you are switching provider.
- Legal fees – You may have to pay for legal work by a conveyancer when remortgaging.
- Administration costs – When you take out a new mortgage, there might be an application fee for releasing your deeds from your current lender.
- Mortgage fees – You may have to pay an arrangement or booking fee. These are fees paid to your provider that cover the admin of setting up a new mortgage. These range from a few hundred pounds to a percentage of the mortgage value, so check with your lender.
Before remortgaging, work out how much you’ll pay in fees compared to the money you’ll save, to give you a better idea of which is the best option. Not all providers will charge all of the above fees – Lloyds Bank don’t charge valuation, legal, admin or mortgage fees, for example.
Risks when remortgaging
There are some occasions where remortgaging might not be the right choice for you. Look out for:
- Interest rates – Your current mortgage may already have the best rate available to you, so you won’t save by switching.
- Early repayment payment periods – If you’re switching your mortgage early, you might have to pay an early repayment charge.
- Negative equity – If you owe more on your mortgage than your house is worth, you’re in negative equity. Homeowners with negative or low equity might find it harder to remortgage.
Remortgaging in special circumstances
Changes in your job or life might change what kind of mortgage you can get. It’s important to be honest about your circumstances when applying for a new mortgage deal.
There are a few big life events that can impact your eligibility when remortgaging:
- Going on maternity leave – Remortgaging when on maternity leave is possible, but your lender may require a letter from your employer or payslips to show your maternity pay.
- Becoming self-employed – If you’re self-employed, you may need to provide your business accounts and tax returns.
- Becoming unemployed – If you’ve become unemployed, it can be hard to remortgage. Talk with your mortgage advisor to see how they can help.
Calculators & tools
We have a range of mortgage calculators to help you:
- Find out how much you could borrow from Lloyds Bank
- See how much you could save if you make overpayments on your mortgage
- Get an idea how a change to the Bank of England Base Rate could effect your monthly payments
Important legal information
Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.
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