Most homeowners don't lose money on their mortgage by making a bad decision.
They lose it by making no decision at all, like letting a fixed deal expire, drifting onto their lender's standard variable rate, or putting off sorting things out.
Remortgaging is how you make sure you're not paying more than you need to. And it's less complicated than you might expect. This guide explains what remortgaging involves, when to act, and how to make sure you end up on the right deal.
What is remortgaging?
Remortgaging means replacing your existing mortgage deal with a new one. That might mean moving to a different lender or switching to a new product with your current lender.
Most people remortgage at the end of a fixed-rate or tracker period, when their current deal expires, and they'd otherwise be moved onto their lender's standard variable rate (SVR). But remortgaging isn't only triggered by your current deal expiring.
Sometimes your circumstances change, your property increases in value or better options become available, and it makes sense to act.
The process is broadly similar to taking out a mortgage in the first place. Your lender assesses your income, outgoings, credit history and the value of your property before making you an offer. The key difference is that you're already a homeowner, which means the process is often quicker and more straightforward than your original application.
Why do people remortgage?
There's rarely just one reason that people remortgage, but these are the most common:
To avoid the standard variable rate
When your fixed deal ends, your lender will automatically move you onto their SVR. This rate is almost always higher than the deal you were on, sometimes significantly so. Remortgaging before that happens is one of the simplest ways to protect your monthly payments.
To reduce your monthly outgoings
If interest rates have fallen since you took out your mortgage, or your loan-to-value ratio has improved as your property has increased in value, you may be able to access a lower rate. Over the remaining term of your mortgage, that difference can add up.
To release equity
As your property's value grows, so does the equity you hold in it. Remortgaging allows you to release some of that equity as a lump sum, which you might use for home improvements, to pay down your other debts, or to fund a major life event.
Because your circumstances have changed
A new job, a move into self-employment, or an improvement in your credit profile can all open options that weren't available to you before. Equally, if your situation has become more complex, finding the right deal early, before your current one expires, gives you the time to explore your options properly.
To switch repayment types
Some people want to move from interest-only to a repayment mortgage or adjust their repayment term. A remortgage is often the right moment to make those changes.
When should you start the remortgage process?
The standard advice is to start looking at your options three to six months before your current deal ends, but that's a minimum, not a target.
The reason is straightforward. You can typically secure a good mortgage offer in advance, which means you can lock in a rate now without it taking effect until your current deal expires. While there's no financial downside to starting the process early, there can be a real cost to leaving it too late.
If you miss the window, your lender will move you onto their SVR automatically. Depending on the gap between your fixed rate and the SVR, that can mean a much higher monthly payment from day one, and you'll still need to go through the remortgage process to get off it.
Lenders' criteria and available rates can also shift, sometimes quickly. Starting the remortgaging conversation early gives you more options, more time to consider them, and more room to act if something unexpected comes up during the process.
How does the remortgage process work?
The process typically follows these stages:
Review your current deal
Before anything else, it's worth understanding what you're working with. Check when your current fixed-rate ends, whether any early repayment charges apply, and what your outstanding balance is.
Early repayment charges can vary. Some are high enough to make it sensible to wait. Others are modest enough that moving early makes sense.
Assess your loan-to-value
Your loan-to-value (LTV) is the ratio of your outstanding mortgage to your property's current value. The lower your LTV, the better the rates typically available to you. If your property has risen in value since you bought it, your LTV may be considerably lower than when you last arranged your mortgage, which can make a meaningful difference to the deals on the table.
Search the market
Going directly to your current lender is the path of least resistance, but it's rarely the path to the best deal. A whole-of-market broker, like FG & Cook, can search across thousands of products to find the most suitable option for your circumstances, including rates that aren't always available directly to the public.
Make your application
Once you've identified the right deal, your broker will help you prepare and submit the application. The lender will assess your income, affordability, credit history and the property itself. Having everything in order before you apply can speed things up considerably.
Valuation
The lender will carry out a valuation of your property. In many straightforward remortgage cases, this doesn't require a full home survey, but lenders can, and do, instruct a more detailed inspection. Occasionally, a valuation comes in lower than expected, which can affect the rate you qualify for. It's worth knowing this is a possibility, and that it's not necessarily the end of the road.
Offer, legal work and completion
Once the lender is satisfied, they'll issue a formal mortgage offer. Your solicitor or conveyancer will then handle all the legal paperwork, and on completion, your new mortgage replaces the old one. For a straightforward remortgage with no change of lender, the legal process is often simpler and faster than a purchase.
What can go wrong, and how to handle it?
Most remortgages complete without a hitch. But it's worth knowing what the common sticking points are, and what they mean in practice.
If the lender's valuation comes in below what you were expecting, it can push your LTV into a higher bracket, meaning the rate you were offered may no longer apply. In some cases, this can affect whether your lender will proceed at all. Understanding why a down-valuation has happened, and what the options are, requires both financial and surveying knowledge, which isn't something every broker can bring to the table. At FG & Cook, we have vast in-house expertise in both.
Your circumstances will almost certainly change between mortgages. A missed payment, CCJ or period of financial difficulty can narrow your options when it comes to remortgaging. It doesn't rule out a remortgage, but it does mean you need a broker who knows which lenders take a more considered view of credit history, and how to present your case effectively.
Self-employment, multiple income streams, contract work or a recent career change can all complicate how a lender assesses your affordability. The key is knowing which lenders are better suited to your type of income, and how to present your financial picture accurately and persuasively.
And if your property has unusual construction, short lease terms or other features that sit outside standard lending criteria, your options will be narrower. That doesn't mean the right deal isn't out there. It just means you need someone who knows where to look.
None of these issues is an automatic deal-breaker. They're the kind of situations where having an experienced, knowledgeable broker like FG & Cook on your side can make all the difference.
How we can help you remortgage
Remortgaging is about more than finding a better deal, filling out the forms and hoping for the best. The decisions you make, including which lender, which product and which term, will have a real impact on your finances, so getting them right matters.
At FG & Cook, our mortgage team is led by chief broker Jason Cook, whose four decades in the market have built the kind of lender relationships and product knowledge that take years to develop. We have whole-of-market access, which means we're not limited to a handful of lenders. We can search across thousands of products to find the deal that fits your circumstances, not just the one that's easiest to arrange.
And if your valuation comes in short, or your property throws up complications, our in-house RICS surveying expertise means we understand both sides of the equation, the financial and the bricks-and-mortar. That combination is rare, and in complex cases, it can make all the difference to your application.
So, whether your current mortgage deal is ending in a few months or you're wondering if you could be on a better rate, we're happy to talk it through. Book a consultation with our team today to learn how we can help you make sure you're on the right deal.