Remortgages

What is remortgaging?

Remortgaging is when you replace your existing mortgage plan with new terms. Doing so could help you find a better deal and reduce your monthly mortgage payments, to free up funds for home improvements or to help with life’s important moments – like a wedding.

Guide to remortgaging

Remortgaging may work for homeowners who’ve seen an increase in market value since they bought their house and want to make new financial plans.

In this situation, your property is - in theory - worth more than when you bought it, combining your mortgage repayments to date and the estimated increase in value.

Your property’s current value minus your outstanding mortgage is the amount of equity in your property. This can be used to calculate your loan-to-value rate (LTV), given as a percentage. A lower LTV rate can be a great way to secure lower interest rates on your remortgage deal, and so to pay lower monthly instalments going forward and save you interest over the term of your mortgage.

The alternative is to borrow more money than you currently owe against the value of your home. You’ll receive the difference as a lump sum in your bank account to use for your chosen purpose.

Costs of remortgaging

There may be large fees involved when it comes to remortgaging, as it often requires contractual changes, so it’s important to consider whether it’s worthwhile to make the change.

Switching lenders could incur an early repayment charge, meaning you must pay your old lender for moving your mortgage, which you could be tied into for a set period. For example, a fixed rate mortgage will normally have an early repayment charge if you repay or change your mortgage during the initial fixed-rate period.

There are various admin charges to consider too, though not all lenders will charge these; including booking, valuation and conveyancing costs.

Make sure you know exactly what costs are involved before you make the decision to remortgage.

Pros and cons of remortgaging

Like any important decision in life, you should weigh up the pros and cons of remortgaging before committing.

Pros of remortgaging

• You want to borrow money
  Whether it’s increasing the resale value of your property with a new extension or financing your dream wedding, sometimes you need extra cash to take the next step. By remortgaging, you can free up funds against your property, giving you a lump sum to spend as you need.
• You may find a better rate
  With property values increasing over time, it’s likely that your home is worth more than when you bought it. By getting a remortgage quote, you can often find a much cheaper rate, meaning you could potentially save on the interest you’re paying.

Cons of remortgaging

• There are fees to consider
  When switching lenders, you may have to pay your original lender a penalty when you move. This is called an Early Repayment Charge. The fees can be as much as 5% of your existing mortgage balance, so it’s important to see whether these costs outweigh the benefits you’ll get from any cash sum or new repayment plan.
• You don’t have much equity yet
  If you’ve only just purchased your home or don’t have much equity invested yet, it’s unlikely you’ll find a better rate. Wait until you’ve paid off more of your mortgage before considering a switch.

Am I eligible for a remortgage?

Your eligibility depends on several factors, including how much equity you currently possess, the value of your home and your financial situation. Every lender has their own criteria when it comes to deciding whether to offer you remortgage terms.

Be sure you can afford any new repayment plans and cover any fees before deciding whether to switch to new terms or not

How much can I borrow as a remortgage?

With Norton Finance you can borrow between £3,000 and £500,000, dependent on your financial situation.

Commonly asked questions about remortgaging

Still unsure whether remortgaging is the right move? We’ve compiled answers to the more common questions we get asked at Norton Finance.

How long are the repayment terms?

Our flexible repayment terms range from 3 to 30 years.

What are the interest rates?

Interest rates depend on your financial situation but start from 1.38%.

Are there any loan fees?

We get our commission from the lender, not the customer. We may charge a broker fee of 7.5% of the original loan, but that’s capped at £2,000.

Do I need a solicitor?

If you’re remortgaging with the same lender, they’ll handle the legal work. However, if you’re switching for a better rate elsewhere or want to release a cash lump sum, a conveyancing solicitor can assist with all the legal paperwork. This is sometimes provided from the lenders own panel of solicitors.

Do I need a valuation?

You’ll need to get a valuation on your property to find out its current worth. This will give you an idea of how much you’d want to borrow, and if you could find a better deal elsewhere.

Can I pay off a remortgage early?

A remortgage can be paid off at any time during the agreement - but most lenders will charge an Early Repayment Fee if your mortgage contract includes this as part of your original terms and conditions. It’s worth considering whether it is beneficial to pay these fees before deciding if you should repay your mortgage off early.

Applying for a remortgage

There’s a lot to consider when it comes to getting a remortgage quote. That’s why we’ve tried to make the process as easy as possible, for all homeowners.

Once you know how much you want to borrow, use our simple remortgage calculator to help decide whether remortgaging is for you. Once we’ve gathered all the details, we’ll guide you through the next steps of the remortgaging process.