Remortgaging

Switch before your lender does it for you.

Every mortgage has a date on it. When the initial period ends the product does not renew — the loan reverts to the lender's standard variable rate, which is set by the lender, changed at the lender's discretion, and is usually the most expensive rate it has.

Nothing announces this beyond a letter. The payment simply changes, and it changes because nobody did anything.

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The deadline

The end of a fixed period is a date, not an event.

A fixed or tracker product runs for a stated initial period. On the day after it ends, the same loan on the same property with the same borrower moves to the reversion rate — almost always the lender's standard variable rate. The balance has not changed and neither have you. Only the price has.

Reverting is a real cost and an entirely avoidable one. It is also easy to drift into: the letter arrives while the initial period still has months to run, gets filed, and the next reminder is the payment itself.

There is one useful thing about the standard variable rate, which is that products on it almost never carry an early repayment charge. If you are already on it, you can leave whenever you like — so being on it is a problem you can fix immediately rather than one you have to wait out.

Lenders will usually let you reserve a new rate several months before your current one ends, and hold it until the switch date.

Reserving early is not a commitment to that product — if a better one appears before the switch, it can generally be changed.

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Two routes

A product transfer and a remortgage are not the same thing.

Both replace the rate you are on. One stays with your existing lender; the other moves the loan to a new one. The difference in effort is large, and so is the difference in what is available to you.

	Product transfer	Full remortgage
Who you end up with	Your existing lender, on a new product.	A new lender, on a new mortgage.
Choice of products	Only what that lender offers its own customers.	The whole market, including lenders you cannot approach directly.
Affordability assessment	Often none, provided nothing is changing.	A full assessment, as if you were applying for the first time.
Legal work	None — the security is unchanged.	Required, though many products include a basic service.
Valuation	Usually not needed.	Normally required, often at the lender's cost.
How long it takes	Days.	Weeks, and worth starting well ahead of the switch date.
Borrowing more	Possible with some lenders, and then assessed.	Straightforward to build into the application.
When it wins	Circumstances have changed for the worse, or speed matters most.	Your circumstances are sound and you want the best available terms.

A product transfer being easier is not an argument for it being right. It is the correct answer surprisingly often — but the only way to know is to price it against what the rest of the market would offer, which is the comparison a lender has no reason to put in front of you.

Reasons

Remortgaging is not only about the rate.

The end of an initial period is the natural moment to change the structure of the loan, because it is the one point at which leaving costs nothing.

The initial period is ending

The default reason, and the one with a deadline attached. The aim is a new product live on the day the old one ends, with no month spent on the reversion rate in between.

Raising capital

Borrowing more against the property, most often for home improvement. The lender will ask what the money is for and will assess affordability on the larger balance. Some purposes are acceptable to some lenders and not to others.

Changing the term

Shortening it raises the monthly payment and cuts total interest sharply. Lengthening it does the reverse, and is a legitimate way to make a payment manageable — provided it is a decision rather than a drift.

Adding or removing a person

A transfer of equity, usually after a separation, a marriage or a parent stepping back. It is a legal change to the ownership as well as a lending one, so it needs a conveyancer regardless of the route.

Moving off interest-only

Converting some or all of the balance to capital and interest, so the debt actually reduces. Doing it early in a term costs far less each month than doing it late, because there is more time to spread the capital over.

Consolidating other debt

Possible, and to be approached carefully. Moving unsecured debt onto a mortgage lowers the monthly cost but secures that debt against your home and can increase the total repaid considerably by spreading it over a much longer term.

Timing

Start earlier than feels necessary.

A remortgage to a new lender is a full application: income verified, credit searched, property valued, case underwritten, offer issued, then legal work to move the charge from one lender to the other. Each stage has a queue in front of it, and the queues lengthen when rates move and everybody applies at once.

Lenders will generally let you secure a rate months ahead of the switch date, which means the sensible approach is to reserve early and keep looking. If something better appears before completion, the application can usually be changed to it.

Leaving early is the one thing to check before doing any of this. During an initial period an early repayment charge normally applies, calculated as a percentage of the balance, and it can easily exceed anything a better rate would save. That charge is not always a reason to wait — occasionally the saving genuinely outweighs it — but it is always a calculation to do rather than an assumption to make.

An early repayment charge usually steps down each year of the initial period, so what is prohibitive in year one may not be in year four.

Check whether your lender's charge is calculated on the original balance or the current one — on a loan you have been overpaying, the difference is real.

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Process

What a remortgage actually involves.

Find out where you stand
Current balance, current rate, the exact date the initial period ends, the reversion rate it falls onto, and whether an early repayment charge applies today. Your lender will confirm all of it, usually in an app or in one phone call.
Establish the property's value
The loan to value drives which products you can have, and after several years of payments — and whatever the market has done — it is often better than you assume. A better band is the most common source of an unexpectedly good outcome here.
Compare the transfer against the market
Your existing lender's retention offer, priced against what a new lender would do, both on total cost across the initial period rather than on the headline rate.
Apply, and reserve the rate
The documents are the same as for any application. Reserving the product locks its terms while the case is processed, and the case is processed against the switch date rather than against today.
Valuation, offer and completion
The new lender values the property and issues its offer; the legal work moves the charge across and redeems the old loan. It is timed to complete as the old product ends, so there is no gap on the reversion rate.

Questions

Remortgaging questions.

How early can I start?

Most lenders will let you reserve a new rate several months before your current product ends and will hold it until the switch date, so beginning around half a year out is comfortable rather than premature. Starting early costs nothing and leaves room for the case to take longer than expected — which, when rates move and the whole market applies at once, it sometimes does.

Will I have to pay an early repayment charge?

Only if you repay or move the loan during the initial period. Once that period ends there is normally no charge, which is precisely why the switch is timed to the end of it. If you need to move sooner, the charge is a real cost to be weighed against the saving — it is usually a percentage of the balance, and it usually reduces with each year that passes.

Do I need a solicitor to remortgage?

For a full remortgage to a new lender, yes, because the legal charge has to be discharged by one lender and registered by another. Many remortgage products include a basic conveyancing service for exactly this. If you are staying with your existing lender on a product transfer, there is no legal work at all. Anything that changes the ownership — adding or removing a person — needs a conveyancer whichever route you take.

Can I remortgage if my circumstances have changed?

It depends on the change and on the lender. Moving to a new lender means a fresh affordability assessment, so reduced income, a recent move into self-employment or new credit commitments can all narrow the options. A product transfer with your existing lender often does not require reassessment, which makes it the more realistic route when circumstances have worsened — and a genuinely useful one.

Is it worth remortgaging for a small saving?

Compare the total cost across the initial period, including every fee, against the total cost of staying — not the two rates. On a small balance a product fee can consume the whole saving; on a large one a modest rate difference is worth a great deal. The arithmetic answers it, and it answers it differently for different people.

What happens if I do nothing?

The loan moves to the lender's standard variable rate on the day the initial period ends and stays there until you act. That rate is set by the lender and can change at any time. There is no penalty for leaving it, so it is not a trap you are stuck in — but every month spent on it is money spent for nothing.

Keep reading

Mortgage repayment calculatorWork out a monthly repayment, total interest and loan to value, and see which of the four inputs actually moves the figure.

Moving home mortgagesPorting your existing deal, redeeming it for a new one, or keeping it and letting — the three routes out of a mortgage when you move.

How it worksThe UK mortgage process end to end: agreement in principle, full application, valuation, underwriting, offer, exchange and completion.

Your home may be repossessed if you do not keep up repayments on your mortgage. Figures shown on this site are illustrative estimates and do not constitute advice or an offer of credit.

Next step

Know your switch date before it knows you.

Tell us when your current product ends and we will tell you what your existing lender is offering, what the rest of the market is offering, and which is actually cheaper across the period.

Check my remortgage options Run the numbers first

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