Introduction: Unlock Your Property’s Potential
Looking to reduce your monthly mortgage payments, consolidate expensive debt, or fund home improvements? Remortgaging could be your golden opportunity. As property finance experts who have arranged over £4.2 billion in funding, we’ve guided countless homeowners through successful remortgages that have saved them thousands of pounds.
In today’s financial climate, with interest rates continually fluctuating, understanding how to remortgage strategically is more important than ever. This comprehensive guide will walk you through everything you need to know about remortgaging to save money while securing your financial future.
Ready to explore your remortgage options right away? Email me directly at paul.welch@millionplus.com for a personalized consultation on how much you could save.
What is Remortgaging and Why Consider It?
In simple terms, remortgaging is the process of switching your existing mortgage to a new deal—either with your current lender or a different one. This strategic financial move allows you to:
- Secure a lower interest rate, potentially saving thousands over the life of your loan
- Lock in a fixed rate for greater financial security during uncertain economic times
- Access better mortgage features such as overpayment options or payment holidays
- Borrow additional funds for home improvements or other significant expenses
- Consolidate higher-interest debts into one manageable payment
The beauty of remortgaging lies in its flexibility. Whether you’re looking to reduce monthly outgoings or leverage your property’s equity, a well-timed remortgage can be a powerful financial tool.
The Financial Benefits of Remortgaging
1. Significant Monthly Savings
One of the primary reasons homeowners remortgage is to save money. If your current mortgage deal is ending, you’ll likely be transferred to your lender’s Standard Variable Rate (SVR). These rates are typically much higher than competitive fixed or variable deals on the market.
For example, a homeowner with a £300,000 mortgage could save over £500 per month by switching from an SVR of 6.5% to a new fixed rate of 4.5%. That’s a potential annual saving of £6,000—money that could be better utilized elsewhere in your financial planning.
2. Protection from Interest Rate Volatility
With the economic landscape constantly shifting, interest rates can change rapidly. By remortgaging to a fixed-rate product, you can shield yourself from market fluctuations and gain valuable peace of mind. Your monthly payments remain consistent, allowing for more accurate budgeting and financial planning.
3. Access to Built-Up Equity
If your property has increased in value since you purchased it, you may have built up significant equity. Remortgaging allows you to access this equity without selling your home. This capital can be strategically deployed for:
- Home improvements that further increase your property’s value
- Investment in additional property
- Education funding
- Debt consolidation at much lower interest rates
- Business investment opportunities
How Remortgaging Works: A Step-by-Step Process
Remortgaging may sound complex, but with the right guidance, it’s a straightforward process. Here’s what to expect:
1. Review Your Current Mortgage Terms
Before proceeding, check your existing mortgage details:
- When does your current deal end?
- Are there any early repayment charges (ERCs)?
- What’s your current interest rate?
- How much is outstanding on your mortgage?
This information forms the foundation of your remortgage strategy and helps determine optimal timing.
2. Assess Your Financial Position
Take stock of your current financial situation:
- Check your credit score (the higher, the better your remortgage options)
- Calculate your loan-to-value (LTV) ratio—this is the percentage of your property’s value that you’re borrowing
- Consider how much equity you have in your property
- Determine if you need to borrow additional funds
Your loan-to-value ratio is particularly crucial as it directly impacts the rates available to you. The lower your LTV, the better the rates you’ll be offered. The best rates typically start at LTVs below 60%, with other common thresholds at 70%, 75%, 85%, and 90%.
Not sure about your current LTV or how much you could potentially save? Create a free account for instant access to our remortgage calculator and personalized rate checker.
3. Research Available Deals
Once you understand your position, it’s time to explore the market. This is where working with a specialist mortgage adviser becomes invaluable. They can:
- Search across the entire market for the best deals
- Access exclusive rates not available directly to consumers
- Match products to your specific circumstances
- Factor in fees and charges to calculate the true cost of each option
4. Application and Approval
After selecting the most suitable remortgage product:
- Submit your application with all necessary documentation (proof of income, ID, bank statements)
- A property valuation will be arranged by the lender
- The lender will conduct affordability and credit checks
- Upon approval, you’ll receive a mortgage offer (typically valid for 3-6 months)
5. Completion
The final stage involves legal work to transfer the mortgage:
- Your solicitor handles the legal aspects of the remortgage
- Your new lender pays off your existing mortgage
- If you’re releasing equity, the additional funds will be transferred to you
- You begin making payments on your new mortgage
The entire process typically takes 4-6 weeks from application to completion, though this can vary based on complexity. We recommend starting your remortgage research at least 6 months before your current deal ends to avoid any gap where you might revert to the higher SVR.
Types of Remortgage Products to Consider
Different mortgage products suit different circumstances. Here are the main options to consider:
Fixed-Rate Mortgages
Your interest rate remains unchanged for a set period (typically 2-5 years), providing stability and predictable monthly payments. Fixed rates are ideal if you:
- Value budgeting certainty
- Believe interest rates may rise
- Prefer knowing exactly what you’ll pay each month
Variable Rate Mortgages
These include tracker mortgages where your rate follows the Bank of England base rate, usually at a set margin above it (e.g., base rate + 1%). Variable rates may offer:
- Lower initial rates than fixed products
- The benefit of rate decreases if the base rate falls
- Greater flexibility with fewer early repayment charges
Offset Mortgages
These innovative products link your savings account to your mortgage, reducing the interest you pay. For example, if you have a £300,000 mortgage and £100,000 in linked savings, you’ll only pay interest on £200,000.
Offset mortgages are particularly advantageous for:
- Higher-rate taxpayers
- Those with substantial savings
- Self-employed individuals with funds set aside for tax
- People who want to maintain access to their savings while effectively earning their mortgage interest rate on them
Special Remortgaging Scenarios
Remortgaging with Bad Credit
If your credit score has deteriorated since your original mortgage, don’t assume remortgaging is impossible. Specialist lenders cater to those with imperfect credit histories, though rates may be higher. Improving your credit score before applying can enhance your options.
Debt Consolidation Remortgages
Consolidating high-interest debts (credit cards, personal loans) into your mortgage can substantially reduce your overall monthly outgoings. For instance, consolidating £30,000 of debt at 18% APR into a mortgage at 5% APR could save over £300 per month in interest.
However, consider that spreading these debts over a longer term may increase the total interest paid, despite the lower rate. We can help you calculate whether this approach makes financial sense for your situation.
Struggling with high-interest debts? Email paul.welch@millionplus.com for a confidential discussion about how remortgaging could help consolidate your debts and reduce your monthly outgoings.
Remortgaging While on Maternity Leave
Many lenders take a flexible approach to remortgaging during maternity leave, considering your return-to-work income rather than your temporary reduced earnings. Documentation of your employment terms and return date is crucial.
Remortgaging with International Income or Properties Abroad
For those with international income sources or properties in multiple countries, remortgaging requires specialist expertise. Access to private banks and international lenders becomes invaluable in these scenarios.
Have complex income arrangements or international assets? As specialists in high-net-worth financing, we have the expertise and banking relationships to structure the optimal remortgage solution. Book a consultation to discuss your unique situation.
Timing Your Remortgage Perfectly
The optimal time to remortgage depends on several factors:
1. When Your Current Deal is Ending?
Start exploring options 6 months before your fixed rate expires to avoid reverting to the SVR.
2. When Interest Rates Are Favorable?
If current market rates are significantly lower than your existing rate, remortgaging could make financial sense even if you face some early repayment charges.
3. When Your Property Has Increased in Value?
A significant increase in your property’s value could push you into a lower LTV band, unlocking better rates.
4. When Your Financial Situation Has Improved?
If your income has increased or your credit score has improved, you may now qualify for better mortgage products.
Is your current mortgage deal ending within the next 6 months? Don’t wait until it’s too late. Contact us today to start exploring your remortgage options and potentially save thousands of pounds.
Potential Costs to Consider
While remortgaging can save money, be aware of potential costs:
- Arrangement fees: Typically between £0-£1,999
- Valuation fees: Often £250-£500 (though many lenders offer free valuations)
- Legal fees: Usually £300-£500 (again, many remortgage deals include free legal work)
- Early repayment charges: Could be 1-5% of your outstanding mortgage if you’re leaving your current deal early
- Exit fees: Some lenders charge a small administration fee (£50-£200) when you repay your mortgage
The key is to calculate whether the savings from your new rate outweigh these costs over time. In many cases, lenders offer fee-free remortgage packages to attract new customers.
Why Work with a Mortgage Expert for Your Remortgage
While you can approach remortgaging directly, working with a specialist mortgage adviser offers significant advantages:
- Whole-of-market access to find truly the best deals, including those not available directly to consumers
- Expert negotiation on your behalf to secure favorable terms
- Time-saving application management, handling paperwork and lender communication
- Specialist knowledge of lender criteria, especially valuable for complex situations
- Long-term strategy development that considers your broader financial goals
At Million Plus, our extensive relationships with high street banks, building societies, private banks, and specialist lenders mean we can secure exceptional terms tailored to your specific circumstances.
Ready to find out how much you could save? Our team has facilitated over £4.2 billion in property financing and can help you secure the best possible remortgage terms. Visit our financing page to schedule your consultation today.
Final Thoughts: Is Remortgaging Right for You?
Remortgaging is a powerful financial tool that can deliver substantial savings, provide stability, and help you achieve your property and wealth goals. However, it’s not the right move for everyone in all circumstances.
The ideal remortgage strategy depends on your unique situation—your current rate, remaining term, future plans, and overall financial position. That’s why personalized advice is invaluable in making the right decision.
If you’re considering remortgaging to save money, access equity, or consolidate debt, we’re here to help you navigate your options and secure the most advantageous terms possible.
