What is Remortgaging?

Full Definition

Remortgaging means replacing an existing mortgage with a new one, either by switching to a new deal with the same lender (a product transfer, which usually involves no new affordability check or legal work) or by moving the mortgage to a different lender entirely (which involves a full application, valuation and legal process, similar to taking out a mortgage for the first time). Most homeowners remortgage when their initial fixed-rate or tracker deal is ending, since failing to act means moving onto the lender's standard variable rate, which is typically more expensive. Remortgaging can also be used to release equity by borrowing more than is currently owed -- for example to fund home improvements or consolidate debt -- subject to the property's current value and the borrower's Loan-to-Value ratio and affordability. Most lenders let borrowers lock in a new deal up to about six months before their current one ends, so shopping around three to six months ahead of a deal's expiry is common advice to avoid a costly gap on the SVR.

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