Glossary · UK
What is Remortgage?
Replacing an existing mortgage with a new one, either with the same lender or a different one, typically to secure a better interest rate, release equity, or move away from an expiring deal onto the lender's SVR.
Full Definition
A remortgage is the process of replacing an existing mortgage on a property with a new mortgage, either by switching to a new deal with the same lender (sometimes called a product transfer, which typically avoids a full new underwriting process) or by moving the mortgage to an entirely different lender, who will normally require a fresh valuation, affordability assessment, and legal work similar to a new purchase. The most common reason to remortgage is that an initial fixed, tracker or discount period is coming to an end, after which the mortgage would otherwise revert to the lender's often significantly higher Standard Variable Rate; arranging a new deal in good time, typically starting the process three to six months before the current deal ends, can avoid a period of paying the more expensive SVR unnecessarily. Remortgaging can also be used to raise additional funds by borrowing against increased property value or accumulated equity (for home improvements, debt consolidation, or a deposit on another property), to switch mortgage type (for example from interest-only to repayment, or from a variable rate to a fixed rate for payment certainty), or to release better terms if personal circumstances -- such as a lower loan-to-value ratio from house price growth or capital repayments -- have improved since the original mortgage was taken out. Early repayment charges on the existing deal, arrangement fees on the new one, and legal and valuation costs all need to be weighed against the potential savings or benefits of remortgaging before deciding whether, and when, to proceed.