Remortgage

Can we start with some context around the remortgage market?

Richard: Of course. Ahead of this, I was looking at how many households we’re looking at in terms of remortgaging. Of 100% of households in the UK, only 64% actually own their homes. Of that, 28% are mortgaged, so 36% are owned outright, and the rest are renting.

To break that down, there’s just over 7 million households in the UK who have a mortgage, and actually the potential market is double that.

People tend to go through the cycle of buying a home, paying it off, and the next generation takes it on. If there are 7 million households, that includes one in three adults in the UK population – so I would hope this podcast would benefit a lot of people.

What is a remortgage? How does the process of remortgaging work in the UK?

Matt: It’s effectively replacing your current mortgage with a new one. Nobody really wants a mortgage – you just want the property. In most cases, it’s your home.

Remortgaging is about trying to ensure you’re always on the best possible deal for you, and trying to keep those costs down. It’s like switching a 0% credit card to another 0% credit card – although you don’t find mortgages at 0%.

With a remortgage you are replacing one mortgage provider with another. You’ll also come across options like product transfers or rate switches, where you remain with your existing lender and pick a new deal with them.

We would look at those options alongside a new lender. It’s often a financial decision, and lenders price according to demand, so you’ll often find it’s potentially cheaper for you to move to a new lender. Your current lender can’t match what another is willing to offer you.

This is where a good advisor comes into their own – with that broad view of the market, the comparison with your current lender and a consultation around what you want to do.

How long does it take to remortgage?

Richard: I’d always allow about six to eight weeks to switch lenders. The mortgage itself takes two to three weeks – the process of getting the application in and an offer out. That’s not what takes the time. It’s the legal work.

We’re talking in March 2025 where stamp duty is changing next month and solicitors can be a pain right now. I do feel for them because they’re trying to obviously hit a deadline to avoid costing people a lot of money.

Don’t leave it too late and think it’s going to happen quickly. I have many clients in corporate law who still have a minor breakdown during the process of the property legal work. Part of the reason it’s taking so long at the moment is that the Land Registry is digitising its database. That’s a podcast in itself, but the point to take away is the legal work is slow.

However, staying with your lender on a product transfer is far easier because there’s no legal work. We can often get a mortgage offer out in a day and it takes about two weeks for the switch to take effect.

A little technical thing is that a lot of banks need the product transfer to be in place for a certain amount of time – they tend to start a month later. So again, don’t leave it too late. Lenders vary, but you can usually book your new rates or three to six months out. We always pick up with people six or seven months out from their deal ending to manage this process for them.

How often can I remortgage my property?

Richard: That would be really dependent upon your product. For example, if you go for a five-year fixed rate, you’re probably going to let that run its course. The only time you tend to come out of a product early might be if interest rates dramatically reduce, where even by paying a penalty it’s still beneficial to change lenders.

Typically, if you come out of a deal early, penalties are attached. Actually, nearly 40% of my clients are on tracker rates right now, as in March 2025, interest rates are set to come down.

So to be in a position to take a better deal later on, you’ll want flexibility. You might also want to pay it off sooner. You might take a tracker, and if one year down the line rates have dropped significantly, you might go for a fixed rate. It really depends whether there is a cost saving and when your product ends.

What are the main reasons why people choose to remortgage?

Matt: The main reason is generally to avoid the lender’s standard variable rate, which you revert to at the end of your fixed or tracker deal. It’s a case of self-preservation to avoid that rate, which feels a bit like a punishment.

It’s a moment to look at your options – debt consolidation being one of them, or home improvements. You might be looking to put a new kitchen in, for example, or redecorate.

Sometimes people will look to pay school fees, and use some equity to do that. You might buy a car or other property.

The remortgage process presents an opportunity to take some money out of the property, providing that’s possible with the level of equity. An advisor would always be my first port of call for that conversation. You can then potentially secure a better deal while releasing money for other purposes.

Can I remortgage to consolidate my debts?

Matt: Debt consolidation is a hot topic given we’re in March 2025 and we’ve been through a cost living crisis. Lots of households have increased their level of debt to get through challenging times, which is often unsecured debt in the form of credit cards and loans.

People often consider potentially adding that debt to their mortgage, as rates can be cheaper. It could reduce some of that monthly payment burden they’ve been suffering.

That’s always a really important conversation to have with an advisor, because you’re effectively securing extra debt on your home. It’s a big thing, and you should really think about that before you do it.

If your primary focus in that situation is to bring down monthly payments, though, a remortgage does present a good opportunity to do it.

Is there anything I can’t do on a remortgage?

Matt: There are a couple of things that lenders typically don’t really like when you’re remortgaging – like massive refurbishment projects, knocking lots of walls down and taking the house back to its foundations. Lenders worry about that, given their security is the house.

Paying tax bills is not something lenders like to lend you money for, because it’s often indicative of financial difficulty. Is it good to give somebody some more debt to clear that situation?

Business purposes can be tricky, as well. If you’re a sole trader or running a smaller enterprise, raising money against your home is not something lenders generally like. But aside from that, there are lots of things that you can do. Having a conversation with an advisor is definitely the first port of call.

What factors should I consider when deciding whether to remortgage?

Richard: The main thing is the timing of your deal ending, which I’ve already spoken about, and whether there are penalties.

As Matt touched on very well just then, people are doing major home improvements these days, because the cost of moving is astronomical. That’s especially true with stamp duty going up – and particularly if you own other properties, which is a whole other topic.

Have you done work to your property since you took out your current mortgage? Your mortgage might then be a lower percentage of your property, so you could get a better rate. Always flag that, because it can have an impact on the lender we go with.

At the time of recording, house prices are moving up nicely, but they don’t always. They can go down as well, so bear that in mind.

Your personal situation is also key – has it improved? I was talking to a client today who’d had a massive pay rise. They’ve got 15 years left on the mortgage and when we remortgage, they will reduce it to 10 and pay it off faster.

Over time, your income will usually increase, and your debt remains static in real terms. As wage inflation goes up, you might be able to pay back the mortgage faster in later years. That’s something we’ll certainly explore with you.

Conversely, is your situation not so good? Have you had a pay cut? Have you had any debt issues? Let’s explore that before speaking to a lender, because you might go the other way and extend the term out, or go interest only. There are lots of things you can do.

With capital raising, as Matt explained, if you ever take money out of your property, think about how it will benefit you. As a rule, it’s not a good idea to put more debt on your home without a good reason. Extending your property could be a good one. It’s got to make sense.

What are the advantages and disadvantages of fixed rate versus variable rate remortgages?

Matt: It’s tricky to answer because it really does differ based on your own personal circumstances. It’s largely market-driven.

There are some clues in where the money markets are expecting rates to go. For example, if fixed rates are cheaper than variable tracker rates, that’s often an indication that the market expects rates to fall. The markets have been wrong though, especially in the last few years.

But generally, a fixed rate gives you certainty. That’s the most obvious win. It means your rate is locked in for two, three or five years, although there are lenders offering 10 years and and beyond – even lifetime fixes.

You’ll know what the mortgage payment is going to be every month, irrespective of what’s going on in the world. The downside, of course, is that if rates do fall dramatically, which has happened before, all of a sudden your fixed rate deal can feel quite expensive.

Most fixed rates do come with a penalty attached if you leave prior to the fixed rate ending. Therefore, you are paying for that certainty and security.

On the flip side, a variable rate gives you flexibility. You’re open to the elements, because rates can move. But potentially you can leave that deal early without penalty or with a very small exit fee. If rates don’t rise or fall, though, you’re potentially paying more for flexibility that you perhaps don’t need.

There’s no right answer here. It really depends on your circumstances, so a conversation with a broker is always good. You might have future plans that need to be considered – you may not include those if you arranged a mortgage yourself. You could be saving yourself thousands of pounds in the long run just by getting that advice.

What happens to my existing mortgage when I remortgage?

Richard: This is what the legal team does. In simple terms, they’ll take the money from the new lender, pay off the old lender, and change the charge on the title to the new lender. It does happen, but it happens very slowly. So please leave time for it.

What happens if I don’t remortgage after my deal expires?

Matt: Typically, you would revert to the SVR, the standard variable rate. Most lenders have those and generally they are pretty painful. You want to avoid that happening.

These rates tend to be three to four percent higher than the base rate at any time, and can give you a real shock. Depending on the size of your mortgage, you could be hit with a payment that’s hundreds of pounds a month more than you’re used to paying.

It’s something to avoid, but sometimes it can’t be – if you’re in the middle of selling the property, for instance. But you always have that option of a product transfer or rate switch – so there isn’t much reason to let this happen.

We’ve got clients who are considering selling their home, but rather than have them suffer that standard variable rate, we’ve arranged a tracker deal that’s a couple of percent lower. That’s a huge saving. That’s why that advice conversation is always really important.

Can I remortgage if I have bad credit?

Richard: It’s the classic mortgage answer of ‘yes, but it depends’. If you’ve had any credit issues in the past, lenders run through what happened, when, why, and the monetary value.

It could be as simple as a missed payment a year ago, which isn’t too serious. Most lenders overlook that. But it goes right up to formal things like County Court Judgements, defaults, missed mortgage payments, arrears or bankruptcies.

If any of those serious things happened six years ago or more, lenders won’t look at that specifically. Your credit file is like your driving licence – you might have got a few points at some point, but they do come off.

But the more recent the event is, the more problematic it’s going to be. Keep on top of your credit file – we specifically access it for our clients. Depending on the issue and how much impact it has, you will always have the option of a product transfer. As long as you’ve made all your mortgage payments on time, we can go back to your existing bank.

If you’ve missed a payment on your existing mortgage, you’ll probably need to find another one. Your bank may not offer you a new rate, and you’d go on to the variable rate – but another lender may be a few percentage points cheaper than that.

The key thing is to engage with this early on. There’s normally a solution, and it’s often much better than you think. But if you ignore the problem or leave it to the last minute, you may not get the best outcome, so speak to us as early as possible.

What else do we need to know before we come back with part two?

Matt: The main takeaway from me is that, whilst as somebody who holds a mortgage you might feel equipped to arrange this yourself, so much changes, and very quickly.

It’s always valuable to get some advice. A good advisor will have a conversation with you and throw around some ideas. If that broker can access the majority of the mortgage market as well as your current lender, and it doesn’t cost you anything, why wouldn’t you?

Doing a remortgage yourself might seem straightforward, but the process shifts and changes. Getting advice just gives you a security blanket – and protection on the regulatory side of things. You’re getting formal, professional advice and you have all the guarantees that sit beneath that.

You’ll just get a much better feel for your options. Don’t fall into the trap of thinking that it’s going to be simple. It might be, but have the conversation – there could be something you’ve overlooked.