A Better Deal: How to Remortgage Your Home

Remortgaging, which involves replacing your current loan with another from a different lender, is a great way to cut costs. It reduces your monthly payments, releases some of the value built up on your property, and shortens your mortgage term.


Because of the credit crisis, however, lending societies and banks have tightened their criteria for mortgage lending. Most typically demand deposits of 15-20 percent before considering your remortgage applications. If you got approval for your original loan with a small or no deposit, you may not have enough equity to remortgage. This means you will have to put up with your lender’s standard variable rate. If you can switch, however, here is what you need do:

Prepare Your Paperwork

Prepare your paperwork a few months before your current loan ends. Gather your latest bank and mortgage statements to check how much you are currently paying.

Know How Much It Will Cost You to Switch

Check your small print for any exit fee, which your lender may charge for closing your mortgage. See if there is any early redemption charge as well, especially on fixed, discounted, capped, or cash back deals, as it can make remortgaging too expensive.

Find a Mortgage You Want

Check the different types of remortgage deals, including fixed rate, tracker, and variable rate, to know which one suits your budget and lifestyle best. Speak to lenders directly so you can ask questions. Comparison websites and best-buy tables in the financial pages of some newspapers will help you compare deals.

Check the Fees

Remortgaging can help you save money, but it is not as cheap as it sounds. You may need to pay legal fees, application or arrangement fees, and a valuation fee. Some lenders add these fees to the loan, but you will have to pay interest based on the amount. You can save money if you use the lender’s legal service.

Ask Your Current Lender to Match the Deal

See if your current lender is willing to match your new deal. If they offer something similar, consider moving to it so you can save time and money.

If your current lender does not offer something worth staying for, apply for the new deal you have found. Start early so you can navigate through the process more smoothly.