If you’re carrying a mortgage you don’t mind sharing with a bank, remortgaging is probably on your radar. But when is the right time to press that switch and start saving actual cash, not just pretend savings on a mortgage rate? Let’s cut to the chase and figure out the best moments to remortgage without turning it into a full-time job.
What remortgaging really is and why it matters
Remortgaging means switching your existing mortgage to a new deal, either with your current lender or a new one. It can slash monthly payments, shorten or extend your term, or release equity for a big purchase. But it isn’t a magic wand. If you don’t do the numbers, you’ll end up paying more in fees or interest—even if the rate looks lower at first glance.
– It’s not just about a lower rate. Consider fees, arrangement costs, and how long you’ll stay in the home.
– Remortgaging can help you fix payments, so you know exactly what you owe each month.
– You can release equity for home improvements, paying off debt, or funding life moments (new kitchen, anyone?).
If you’re asking “Should I remortgage right now?” you’re in the right neighborhood. The trick is timing your rate, costs, and your plans for the home.
How to tell if the timing is right
Timing isn’t a mysterious art; it’s a mix of rates, fees, and personal plans. Here are the telltale signs you might be in the right window.
When your current deal is ending or has ended
– If your fixed-rate deal ends, you’ll move to the lender’s standard variable rate. That can be more expensive unless you switch.
– Locking in a new deal before the current one ends can preserve monthly payments and save you money on the spread.
FYI: Some lenders offer “porting” options that let you transfer your deal to a new home. If you’re planning to stay put, that might be ideal.
When rates look unusually low (compared to your current rate)
– A drop of even 0.5% can mean meaningful savings over time.
– Don’t chase a low rate alone. Compare the whole package: fees, valuation costs, and any early repayment charges.
If the current market price is friendlier than your mortgage, it’s a strong sign to shop around.
When you want to change the loan type
– Switch from a repayment to interest-only (or vice versa) for a specific goal. This can lower monthly payments in the short term.
– If you’re aiming for a shorter term to clear the debt faster, remortgaging can help you refocus.
Remember, changing the loan type can affect long-term costs and eligibility, so don’t leap without checking the math.
Costs to expect and how they stack up
Remortgaging isn’t free—far from it. You’ll face a mix of upfront and ongoing costs. Here’s how to break it down so you’re not blindsided.
Upfront costs
– Arrangement fee (sometimes called product fee): charged by the lender for setting up the new mortgage.
– Valuation fee: the lender wants to confirm the property’s value.
– Legal fees: conveyancing costs for the title and paperwork.
– Exit fees from the old mortgage: depending on your current deal, you may face early repayment charges.
Ongoing costs
– Interest rate: the rate on your new deal. Even with a lower rate, you’ll pay over the term you choose.
– Monthly repayments: could go up or down depending on term length and rate.
– Lenders’ fees and annual maintenance: some deals include annual charges you should account for.
Tip: do a “break-even” calculation. How long does it take for the monthly savings to cover the upfront fees? If the answer is longer than you plan to stay, remortgaging might not be worth it.
How to shop for the best remortgage deal
If you’re serious about saving, you’ll need to shop around like you do for a vacation. Here’s a practical game plan to stay sane and save money.
Do your homework with a current loan summary
– Gather your current loan details: remaining balance, rate, monthly payment, and any early repayment charges.
– Know your credit score and debt-to-income ratio. A better score opens more doors.
Compare apples to apples
– Look at total costs over the term, not just the rate.
– Check whether fees are added to the loan or paid upfront.
– Make sure the term length matches your goals (pay off sooner vs lower monthly payments).
Ask about “portability” and product transfers
– Some lenders allow you to move an existing deal to a new property or to a new mortgage without much hassle.
– If you’re staying in the same home and simply want a new fixed-term rate, portability can save you a lot of friction.
What to do if your credit isn’t perfect
Yes, life happens. Payday loans, missed payments, or a recent credit event can complicate remortgaging. But it isn’t a dead end.
Why your score matters
– Lenders use your credit history to gauge risk. A rough score usually means higher rates or more scrutiny.
Ways to tilt the odds in your favor
– Stabilize your finances for a few months: pay down debts, avoid new inquiries, and fix any errors on your report.
– Save a larger deposit or equity cushion. Equity reduces risk for lenders and can unlock better deals.
– Consider a shorter fixed-rate period if you can afford slightly higher payments. It can save more in interest over time.
If you’re getting declined, ask the lender what would improve your chances. Sometimes it’s minor tweaks rather than a major life change.
Strategic remortgaging moves you can plan for
Remortgaging isn’t just about lowering the rate; it’s about aligning with your life goals. Here are strategic moves to consider.
Release equity for a project or cushion
– Releasing equity lets you fund home improvements, pay off high-interest debt, or build an emergency fund.
– Just be mindful: you’re increasing the loan size, which means longer debt and more interest over time.
Switching to a cheaper fixed-rate term
– A cheaper fixed-rate period can give you predictability during life changes (kids, job shifts, etc.).
Consolidating debt responsibly
– If you can bundle higher-interest debts into a lower-rate mortgage, you might save. But don’t turn a short-term debt into a long-term mortgage trap.
Common pitfalls to avoid
Remortgaging can backfire if you don’t mind the gaps. Here are the landmines to dodge.
Underestimating fees and penalties
– Some deals look great on the surface but carry hefty early repayment charges. Do the math.
Overestimating how long you’ll stay
– Break-even logic is real. If you move soon, you might regret the upfront costs.
Ignoring the fine print
– Small print hides important things: eligibility criteria, age of the borrower, and property value assumptions.
Frequently asked questions
Is remortgaging always the best option when rates drop?
– Not always. Rates are a piece of the puzzle. You must weigh fees, term length, and how long you plan to stay. Do the math to see if the savings hold up in your situation.
How soon should I start the remortgage process before my deal ends?
– Give yourself a cushion. Start about 3–6 months ahead. It gives time for valuation, legal work, and lender decisions without pressure.
Can I remortgage if I’m self-employed or have a quirky income?
– It’s sometimes trickier, but not impossible. You’ll likely need more documentation and a stronger track record. Consider using a broker who specializes in self-employed scenarios.
What happens to my existing mortgage if I remortgage? Do I lose the equity?
– You don’t lose equity. You switch the loan, and the new lender pays off the old one. Your equity stays in the property; you just borrow against it differently.
Should I use a mortgage broker or go direct with lenders?
– Brokers can simplify the process and access a wider range of products. If you enjoy digging through rates yourself and know what you want, going direct can work too. IMO, a good broker saves time and teaches you as you go.
Conclusion
Remortgaging isn’t a one-and-done decision. It’s a smart move when the numbers line up with your life plans. If your fixed deal is ending, rates look favorable, or you want to release some equity for a big goal, you’ve got a strong case to explore. Do the math, shop around, and don’t forget the fees—they can bite if you’re not prepared.
If you approach it with a clear plan and a bit of skepticism (and maybe a cup of tea), you’ll walk away with a better mortgage setup than you started with. FYI, the right remortgage could shave months or even years off your debt, or simply keep your monthly payments in check during bumpy times. Ready to crunch the numbers? Your future self will thank you.
