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A remortgage means replacing your current mortgage, either by moving to a new lender or arranging a new deal, and using it to pay off (or replace) the mortgage you already have. Most people remortgage to move onto a better deal when a fixed or tracker rate is ending, to borrow more against their home, or to consolidate other debts. It is different from buying a new property: you keep the same home, but change the mortgage on it.
How does remortgaging work?
When you remortgage, a lender assesses your income, outgoings and credit history, and values your home, before offering a new mortgage. That new mortgage is used to pay off your existing one, so the old mortgage is closed and a new one starts, often with a different lender, rate and term.
The broad steps are usually:
- Decide why you want to remortgage and how much you want to borrow.
- Check your current mortgage for any early repayment charges (ERCs) if you are leaving your deal before it ends.
- Compare deals, or speak to a mortgage adviser who can search the market for you.
- Apply, which usually involves a credit check, a valuation and an affordability assessment.
- Complete the legal work, often handled by a solicitor or conveyancer.
- Your new lender pays off your old mortgage and your new deal begins.
Our guide on how to remortgage step by step goes through each stage in more detail.
Remortgage, product transfer or further advance: what is the difference?
These three terms cover different ways of changing your mortgage, and it helps to know which applies to your situation.
| Remortgage | Product transfer | Further advance | |
|---|---|---|---|
| Who with | Usually a new lender | Your existing lender | Your existing lender |
| What happens | New mortgage replaces the old one | New deal, same lender, same balance | Extra borrowing added to your mortgage |
| Credit check | Usually a hard search | Often a soft search, sometimes none | Often a hard search |
| Valuation | Usually needed | Often not needed | Often needed |
| Full affordability check | Yes | Not required under FCA rules where you are not borrowing more | Usually yes |
A product transfer with your current lender can be simpler if your credit history has changed since you took out your mortgage, because FCA rules allow lenders to switch existing customers to a new deal without a full affordability assessment where you are not borrowing more (MCOB 11.6.3R). A further advance is a way of borrowing more from your existing lender without moving your whole mortgage elsewhere.
Why do people remortgage?
Common reasons include:
- Their current deal is ending. Most fixed and tracker deals run for 2 to 5 years. When one ends, the mortgage usually moves to the lender’s standard variable rate (SVR), which is usually higher, so people remortgage or take a product transfer to avoid this.
- They want to borrow more. This is sometimes called raising capital, for example for home improvements or to consolidate other debts. Where the extra borrowing pays off unsecured debts, those debts become secured on the home, so it is worth reading about debt consolidation remortgages before deciding.
- Their circumstances have changed. Adding or removing a name from the mortgage, for example after a relationship change, or moving to interest-only or repayment.
- Their loan to value (LTV) has improved. Paying down the mortgage or rising property values can move you into a lower LTV band, which may widen the deals available. Our guide on how LTV affects a bad credit remortgage explains this.
What does remortgaging cost?
Remortgaging can involve several possible costs: a valuation fee, a product or arrangement fee, legal fees (often covered by a free legal package for straightforward remortgages), and sometimes a broker fee. If you leave your current deal early, an early repayment charge may apply. Costs vary between lenders and deals, so it is worth checking what is included before you commit. Our guide on how much it costs to remortgage sets these out in full, and our bad credit remortgage calculator can help you get a rough idea of your numbers.
What changes if you have adverse credit?
The mechanics of remortgaging are the same whether or not you have adverse credit: you still apply, get assessed and complete legal work. What changes is the range of lenders who may consider you and, often, the rate offered. Adverse credit includes things like CCJs, defaults, missed payments and mortgage arrears, and lenders weigh the type, amount, age and whether it has been settled.
Some lenders specialise in adverse credit and look at the story behind the entries rather than just the entries themselves. Rates for adverse credit are often higher than high-street rates, and the choice of lender may be narrower, especially for more recent or more serious issues. A product transfer with your current lender is often worth comparing too, since it may involve fewer checks than moving to a new lender. Nobody can promise a particular outcome, and if you are struggling with debts, free and impartial help is available from MoneyHelper, StepChange and National Debtline before you take on more borrowing. Our bad credit remortgage page gives a fuller overview of the options.
Frequently asked questions
Is a remortgage the same as moving house?
No. A remortgage replaces the mortgage on the home you already own. Moving house means selling one property and buying another, which usually involves arranging a new mortgage on the new home rather than a remortgage on the old one. The two are sometimes confused because both involve a new mortgage application.
Do I have to remortgage when my deal ends?
No. If you do nothing, your mortgage usually moves to your lender's standard variable rate (SVR), which is usually higher than a fixed or tracker deal. Many people arrange a new deal before their current one ends to avoid this, either by remortgaging elsewhere or taking a product transfer with their existing lender.
Can I remortgage with a different lender if I have adverse credit?
It can be possible, depending on the type, amount and age of the adverse credit, your equity and each lender's own criteria. Some lenders specialise in adverse credit. A product transfer with your current lender is often worth comparing too, as it may involve fewer checks. See remortgaging with a low credit score.
What is the difference between remortgaging and a further advance?
A remortgage usually means moving your mortgage to a new lender, or arranging a new deal that replaces the whole loan. A further advance is extra borrowing added on top of your existing mortgage with your current lender. Both can raise money, but lenders treat them differently and the checks involved can differ too.