Remortgaging: when to start and what to check

Why timing matters

When an initial deal ends, most mortgages move onto the lender's standard variable rate. This is often higher than the deals on offer, so doing nothing can mean paying more each month.

Many lenders let you secure a new deal up to six months before your current one ends. Starting around then gives you time to compare options, gather documents and move across without a gap. If you are closer to the end date than that, it is still worth starting now.

Your mortgage offer or annual statement shows when your current deal ends. Put the date in your diary, with a reminder several months beforehand.

Check your early repayment charges

Many mortgage deals carry an early repayment charge if you repay or switch before the deal ends. The charge can be significant, and it often reduces as the deal gets closer to its end date.

Before you decide anything, find out:

• whether your current deal has an early repayment charge
• the date it stops applying
• how much it would be if you switched today
• whether your lender charges an exit or administration fee when the mortgage is closed

Your lender can give you a redemption statement showing these figures. In most cases it makes sense to time the switch so it takes effect after the charge ends. There can be exceptions, and an adviser can help you weigh them up.

Other things to check

• Your balance and remaining term. These shape which deals are available and what your monthly payment could look like.
• Your property's value. If it has gone up, or you have paid down a good part of the balance, you may have a wider choice of deals. The lender will carry out its own valuation.
• Your circumstances. A new job, a change in income, self-employment or a change in your family can affect which lenders will consider you. Tell your adviser early.
• Your credit file. Check it for errors before you apply.
• Your plans. If you might move home, repay a lump sum or change how you use the property, the type of deal and its length matter.

Staying with your lender or switching

Your current lender may offer you a new deal, often called a product transfer. This can be quicker and may involve fewer checks. Moving to a new lender means a full application, but it gives you a wider choice.

Neither route is right every time. Comparing both, and looking at the total cost over the length of the deal rather than the monthly payment alone, helps you decide.

Borrowing more when you remortgage

Some people remortgage to borrow extra money, for example for home improvements. The lender will assess affordability on the new, larger loan and will want to know what the money is for.

Some people also consider remortgaging to pay off other debts. This can lower your monthly payments, but it can increase the total amount you pay back, because short-term debts are spread over a much longer period and become secured against your home. Think carefully before securing other debts against your home or property.

If you are over 55 and thinking about releasing money from your home, equity release is a different type of product, which we can arrange via referral.

How the process works

1. Review. We look at your current deal, its end date, any early repayment charge and what you want to achieve.
2. Compare. We search lenders on our panel alongside any offer from your current lender.
3. Recommend. A written report sets out the deal we recommend, the alternatives we considered and the reasons for our choice.
4. Apply. We submit the application, handle the valuation and answer questions from the lender.
5. Complete. We aim to have your new deal start as your current one ends.

If you move to a new lender, a solicitor or conveyancer handles the legal side. Timescales vary between lenders, which is another reason to start early.

Talk it through

GK Finance is based in Northampton and helps homeowners across the UK remortgage by phone or video. Your adviser is CeMAP-qualified, with more than fifteen years of UK industry experience. As an appointed representative of HL Partnership, we have access to more than 90 lenders and providers.

Every lender assesses applications against its own criteria, so we cannot promise a particular deal. What we can do is explain your options clearly. You can read more about our remortgage advice.