A Beginner’s Guide To Remortgaging

A Beginner’s Guide To Remortgaging

Remortgaging is the process of switching to a new mortgage provider or renegotiating the terms of your existing mortgage with your current lender. You can do this to secure a lower interest rate or to access property equity, which is the difference between the value of the property and the outstanding mortgage balance.

For instance, if you’ve built up at least 25k in equity, it could be an excellent time to consider remortgaging for a better interest rate or other reasons. If you need some tips remortgaging after 25k in equity, consider the following:

  1. Check Your Credit Score

A three-digit number that measures your creditworthiness is your credit score. It’s based on information in your credit report, such as your payment history, credit usage, and length of credit history. Lenders use your credit score to determine the risk of lending you money and to set your mortgage’s terms and interest rate.

A good credit score will increase your chances of getting approved for a better mortgage rate, while a low credit score can make it challenging to qualify for a mortgage or result in a higher interest rate. That’s why checking your credit score before considering a remortgage is essential.

You can check your credit score for free through several sources, such as credit bureaus, banks, and credit card companies. Some credit card companies offer free credit score access as part of their benefits package. You can also use certain websites to check your credit score.

  1. Prepare The Necessary Documentation

Gather and prepare the necessary documentation beforehand. This includes proof of income, such as pay stubs or tax returns; proof of employment, such as a letter from your employer; and credit history, which can be obtained through a credit report. 

These documents will be used by the lender to determine your ability to repay the new mortgage and to offer the best possible interest rate. Having these documents ready will make the remortgaging process quicker and smoother.

  1. Compare Rates

Another crucial decision you’ll need to make is choosing the ideal mortgage rate. A fixed-rate mortgage is a loan in which the interest rate is set for the entire loan term, providing borrowers with stable monthly payments throughout the loan. This type of mortgage is best for those who value predictability in their monthly payments.

On the other hand, an adjustable-rate mortgage, or ARM, is a loan where the interest rate can fluctuate based on market conditions. The interest rate is fixed for a certain period—usually 5 or 7 years—after which it can change annually based on the index it’s tied to. This type of mortgage is best for borrowers who are expecting their income to increase in the future and want to take advantage of the lower initial rates.

You can use online comparison tools or consult a mortgage broker to compare rates from different lenders. It’s essential to compare the interest rates and other fees associated with the loan, as these can vary significantly between lenders. The fees can include origination fees, points, and closing costs.

  1. Calculate Costs

Factor in the costs associated with the process. These costs can include legal and valuation fees and any fees your current lender charges for switching mortgages.

Solicitors or conveyancers typically charge legal fees for handling the legal aspects of the remortgage, such as transferring ownership of the property and preparing the necessary documents. Meanwhile, a professional valuer charges valuation fees to assess the property’s value. These fees can vary depending on the lender and the property’s value, so getting an estimate from your lender or solicitor before proceeding is essential.

To calculate the total cost of remortgaging, you’ll need to add up the legal, valuation, and lender fees and any other costs associated with the process. You can then compare the total cost to your potential savings from a lower interest rate.

As with any major financial decision, remortgaging requires careful consideration and thorough research. Make sure that remortgaging is the right option for your particular situation. For some homeowners, remortgaging might not be the most cost-effective option, so take the time to assess all of your choices. If you do everything right, remortgaging can be just the solution for you to save money and gain access to additional funds.


If you plan to remortgage, consult a mortgage broker or financial advisor on how to navigate the process. Also, check your credit score, compare rates and fees, and calculate the costs before making your final decision.

A Beginner’s Guide To Remortgaging

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BDC 301 February 2023