When should you remortgage?

Getting a mortgage is a significant milestone in buying a home, but over time, staying on the same mortgage deal may cost you more than necessary. Regularly reviewing your mortgage and considering remortgaging can help ensure you’re getting the most competitive deal available and save you thousands of pounds in the long run.

Why Consider Remortgaging?

1. Changing Interest Rates:
Mortgage interest rates are affected by the Bank of England’s base rate, which acts as a benchmark for borrowing costs. If rates are rising, as we’ve recently seen, staying on a variable rate mortgage or moving to your lender’s Standard Variable Rate (SVR) when your fixed-rate period expires could result in higher monthly repayments. By remortgaging, you may secure a lower fixed rate and shield yourself from potential future rate increases. Start monitoring the market as soon as interest rates begin to shift to avoid losing out on better deals .

2. Fixed-Rate Mortgage Expiration:
When your fixed-term mortgage ends, your loan will likely revert to your lender’s SVR, which typically has higher rates. Planning ahead—ideally four months before the end of your fixed-rate term—allows you time to find and switch to a more favourable deal. This move could save you hundreds of pounds each month and provide better financial stability.

3. Unlocking Equity:
If the value of your property has increased since your original mortgage, this might place you in a lower loan-to-value (LTV) bracket, qualifying you for better rates. You could also remortgage to release equity for purposes like home improvements or other major expenses. The higher your equity, the better the chances of obtaining lower rates.

4. Long-Term Savings:
Switching to a more competitive fixed-rate deal can save thousands over the full term of your mortgage compared to staying on an SVR. Streamlining the cost of your mortgage—often your largest financial commitment—can deliver significant financial benefits, especially when rates fluctuate. This strategy is particularly effective for individuals whose mortgage deals do not include early repayment penalties .

Best Time to Remortgage
The ideal time to remortgage is typically when interest rates are low. However, rising interest rates or nearing the end of your fixed-term loan might also signal it’s time to act. You’ll want to compare current deals to ensure you’re not paying more than necessary and assess your home equity position—higher equity often means access to lower-rate options .

Factors to Consider
When remortgaging, take into account the potential fees associated with changing lenders, such as arrangement, valuation, and legal fees. Weigh these costs against the potential savings from switching to determine whether remortgaging is worth it .

Steps to Start Exploring Options
1. Check Your Current Terms: Review when your fixed-rate period ends and assess whether you’re subject to any early repayment charges.
2. Evaluate Your Equity: Determine whether your home’s value has increased or your loan-to-value ratio has improved.
3. Research New Deals: Look for fixed-term rates that fit your budget and financial goals. Speak to our Independent Mortgage Advisers.
4. Plan Ahead: Begin reviewing options at least four months before your fixed rate ends or when interest rate changes are announced.

By staying proactive, you’ll ensure your mortgage remains aligned with your financial goals—today and in the future. Start exploring your options now and leverage the benefits of remortgaging.