Remortgaging Your Property: A Complete Guide on How It Works and When to Consider It

Remortgaging Your Property: A Complete Guide on How It Works and When to Consider It

Remortgaging a property involves replacing your existing mortgage with a new one, using the same property as collateral. This process can help you secure a better interest rate, access additional funds, or make changes to the property’s ownership structure. Whether you’re looking to reduce monthly payments, release equity for home improvements, or adjust ownership, understanding the remortgage process is vital for making informed decisions.

This guide provides insight into the key reasons for remortgaging, the process involved, and how to approach it effectively.

Why Should You Remortgage Your Property?

Securing a Better Mortgage Rate

Most mortgage deals last between two to five years, with borrowers enjoying fixed, tracker, or discount rates. After this period, however, the mortgage typically reverts to the lender’s Standard Variable Rate (SVR), which is usually higher. To avoid paying more in interest, homeowners often consider one of the following options:

• Product Transfer: This involves switching to a new deal with the same lender, usually a simpler process with fewer fees.
• Remortgaging with a New Lender: Switching lenders to secure competitive rates, which can potentially offer better terms and reduce monthly payments.

Remortgaging to a lower interest rate can significantly reduce monthly payments, making homeownership more affordable in the long term.

Raising Funds Through a Remortgage

If you’re in need of additional funds, remortgaging can allow you to tap into the equity of your home. This option is popular for purposes such as home improvements, debt consolidation, or even as a deposit for purchasing another property.

You can raise funds through two main routes:

• Remortgaging with a Higher Loan Amount: Borrowing more than your current mortgage balance, with the extra funds being used for specific needs.
• Further Advance: This involves requesting additional funds from your current lender, adding them to your existing mortgage, although the new funds may come with different terms.

Lenders assess affordability, credit history, and the purpose of the funds before approving a remortgage application.

Transfer of Equity

A transfer of equity refers to adding or removing someone from the property’s ownership. This commonly occurs during divorce, separation, inheritance, or when one co-owner buys out the other.

Since the mortgage is tied to property ownership, lenders require updates to the mortgage deed when changes in ownership take place. The process involves legal checks and often a property valuation, ensuring that the person taking over the mortgage can afford the repayments.

How Does the Remortgage Process Work?

The remortgage process closely resembles that of taking out an initial mortgage. Once a lender confirms your eligibility, they will arrange a property valuation to assess its current market value. They will then review your affordability and creditworthiness before issuing a mortgage offer. Upon completion, the new lender repays your existing mortgage, and the new mortgage agreement becomes effective.

The time needed for remortgaging can vary, but it typically takes between four to eight weeks, depending on factors such as property valuation, legal processes, and lender requirements.

Seeking Specialist Remortgage Advice?

If you’re considering remortgaging for better rates, raising funds, or making ownership changes, it’s essential to explore the best options for your financial needs. At Mortgage-Tek, we specialise in helping contractors and self-employed professionals find tailored remortgage deals. Whether you need expert guidance on product transfers, further advances, or buy-to-let remortgages, our team is here to guide you through the entire process.

Contact Mortgage-Tek today and let us help you secure the best remortgage deal for your requirements!