If you’re a new homeowner or perhaps haven’t yet secured your first mortgage, then you may not have yet had to deal with a remortgage.

A remortgage may sound pretty straightforward. You’re redoing your mortgage, essentially, but the reasons why you’d need a remortgage, the types of remortgages you can get, and the terms and conditions that affect how you get your remortgage may be unknown to you.

This guide covers everything you need to know so you can walk away fully confident you understand what a remortgage is and what you’ll need to do to get one yourself when the time comes.

What is a remortgage?

For most, you need a mortgage to buy a property. This mortgage is typically for a period of 25 to 30 years, and at the end, you’ll have paid off your entire home plus interest.

In the US, it’s possible to get a fixed mortgage agreement that lasts the entirety of the loan. In the UK, it’s not.

Here, fixed loan agreements last only two, three, or five years. Occasionally, you may be able to snap up a 10-year fixed-rate loan.

When that loan ends, you’ll automatically be moved from a fixed rate to a variable rate -the standard variable rate (SVR), to be specific. Now, there are instances where the SVR is just what you need. If you have less than £50,000 left on your loan, for example, lenders may not offer you another fixed-rate mortgage. The SVR may also go down (though it can also go up).

The uncertainty of the SVR is why most prefer to stay within a fixed-rate mortgage. When your fixed-rate agreement ends, you can usually get into another one. This is commonly known as a remortgage.

This is not the only reason or way to remortgage, however.

What is remortgaging used for otherwise? You can use it to take out more equity from your home to fund things like home renovations, for example. You can remortgage to consolidate debts, get better deals, and more.

When is a good time to remortgage?

Remortgaging is technically possible at any time, but there are penalties if you try to remortgage early. What does it mean to remortgage early? Simply that you remortgage before your current fixed term mortgage agreement is over.

With that in mind, here are a few examples of when it’s a good time to remortgage:

·         When your fixed-term period ends

If your fixed-term period ends, you will be swapped to the standard variable rate. If you want to go back to a fixed rate, then you can remortgage either with your current or a new lender without any early repayment charges.

·         When interest rates have dropped significantly

If you are paying a significantly higher interest rate than what you could pay elsewhere, then it may be a good time to remortgage, even if you’re currently on a fixed rate. You will need to work out the cost. Only remortgage if the interest savings are bigger than the early repayment charge.

·         When your home value has increased significantly

If your home’s value has increased significantly and your loan-to-value has dropped, you may be able to negotiate a much better deal.

·         When your financial situation has drastically improved

Similarly, you may be able to secure a far better rate if you recently got a much higher-paying position or if you ramped up your credit score and history. Just make sure that what you save is more than what you’d pay on an early repayment charge.

Top reasons to remortgage

There are many more reasons to remortgage, especially if you’re currently out of a fixed-term loan or are in the last six months of your loan period due to how long remortgaging can take. People remortgage because;

• They want to pay a smaller fixed rate than the variable rate
• They want to purchase a property worth much more (or less) than their previous one
• Interest rates are more favourable now
• They want to switch to another provider
• They financial situation has improved
• They want to take out money to make improvements
• They want to consolidate their debts into one mortgage

How to remortgage

If you do want to remortgage, you can either stick with your existing lender (this is technically known as moving your mortgage product) or find a new lender. If you want to see the offers available to you, start looking for options through a mortgage broker like Your Certified Expert in the last six months of your current loan. To help further, we’ve also put together a handy How Does Remortgaging Work guide to help you understand more about the steps involved.