A remortgage is the process of paying off the loan provided by your existing mortgage lender, and subsituting it with a loan from another lender. The purpose is usually to obtain a lower interest rate. Often, borrowers will look at debt consolidation, or other capital raising at the same time.

If you have a Standard Variable Rate mortgage, of more than around £60,000, with more than a few years to run, you should consider a remortgage now. The bigger your mortgage is, the more you stand to save.

Is it worth it?

Simply, the interest paid on a £100,000 mortgage at a SVR of 6.75% over a year is £6750, and at a discounted rate of 4.75%, it's only £4,750.

That saving of £2,000 could pay for your annual holiday, or if your lender allows it without penalty, you could overpay your mortgage by £166 per month. That would knock years of your mortgage term.

When to Remortgage 

At the end of every fixed rate, capped rate, discounted rate, or base rate tracker deal, most mortgages revert to the lenders Standard Variable Rate. Using the example above, if you've been used to a monthly mortgage payment of £395.83, you're about to find that it increases to £562.50, unless you take action.

Lenders love their borrowers to pay the SVR, as they make most of their profits here. Many will switch their borrowers to the SVR at the end of their mortgage deal, without offering any new deal. Some will offer a reduced rate if asked, but rely on borrower inertia to subsidise deals for new borrowers.    

Online Remortgage Enquiry  

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