When can you remortgage? | How long until you can?

When can you remortgage? | How long until you can? | YBS

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At a glance:

When you remortgage will depend on what deal you have and if you want to switch to a new lender.

Remortgaging normally happens when your current mortgage deal is coming to an end.

You can remortgage or switch to a new deal with the same lender.

What is remortgaging?

Remortgaging means switching to a new mortgage deal with a different lender. Think of it in a similar way to when you switch energy providers.

When should I remortgage?

When you decide to remortgage is up to you. People may choose to remortgage when their current deal is coming to end and to avoid being put into their lenders Standard Variable Rate (SVR).

You may want to look into remortgaging two to six months ahead of your deal ending. This way, you might be able to avoid being placed onto a SVR mortgage.

There are lots of reasons that might affect the time you choose to remortgage:

Your home has risen in value – if your home is worth a lot more than you bought it, you might be able to get a lower LTV mortgage product.
Your deal is ending – remortgaging to avoid going onto a lender’s SVR.
You want to change the type of mortgage – if you are on a variable or fixed rate, you may want to swap to a different type of mortgage.

Why you might want to wait

There are also reasons you might not want to remortgage right now. Such as:

You are in negative equity – if you owe more on your mortgage than your home is worth, you might not be able to remortgage.
You’re still in your current deal – if you have to pay an early repayment charge, this might be more expensive than you stand to save by switching.

How to get ready to remortgage

When the time comes, you’ll need to do a few simple actions before you are ready to remortgage.

Find out how much your property is worth

When thinking about remortgaging, you will need to have an idea of what your home is currently worth.

This is because your loan to value is likely to have changed since you took out your current mortgage. Your loan to value will affect the interest rates you are able to get from your remortgage.

You might be able to get an estimate of your home’s value online. Looking at what similar houses in the area have sold for can also help you to know what you home is worth.

This is only an estimate, however, a lender will carry out a valuation when you remortgage, which could differ.

Find out how much you still owe on your mortgage

This will be the amount that you would be borrowing from the new lender on your remortgage. Ask your current lender for a redemption statement to find this out.

Remortgaging fees and charges

There might be costs to pay when you switch mortgage providers:

Product fee or arrangement fee

This is the cost of setting up or ‘arranging’ your mortgage. The product fee can either be paid on application or added to your loan.

Adding to your loan will increase the overall cost of your mortgage, since you will pay interest on it.

Some remortgage products are offered with no product fees to pay, so be sure to check when you’re looking for a new deal.

Valuation fee

The valuation report is used by your new lender to work out how much your home is worth. Lenders might offer free valuations as part of the product, so keep an eye out.

Legal fees

You will have to appoint a legal adviser to carry out searches and transfer mortgage money between lenders. Some lenders might offer free legal fees as part of the product.

Early repayment charge (ERC)

You may need to pay an ERC if you decide to repay your mortgage early or switch to a new deal before your current deal ends. This is normally a percentage of the outstanding mortgage balance.

Exit fee or redemption fee

You may be charged an exit fee by your current lender when you leave. This fee is to cover the administrative costs of closing your existing mortgage account.