Getting ready to remortgage

Need a new mortgage? Switching lender isn't your only option. You can also get a new deal from your current lender – something called a product transfer.

1. Start remortgaging up to six months before your current deal ends to avoid your lender's SVR

   

   If your mortgage deal is ending soon, beware. You'll likely be bumped to lender's far more expensive Standard Variable Rate, typically 6.5% to 7.5%. 

   Therefore it's best to lock in a new mortgage to start as soon as your current deal ends. Yet with acting early you don't know whether today's rates will be beaten by rates available in a couple of months' time. So, it's worth playing the field...

   Get an 'insurance rate' to hedge against future rate changes

   The majority of lenders let you lock in a new mortgage deal a few months before you need it. So in March, even if your deal expires in June, you could lock in March's rate while continuing to the end of your current deal. If rates rise, you've a cheaper deal locked in. If rates fall, it's likely you can ditch the mortgage secured in March, and get a lower rate closer to when you need it. 

   You do this if you're getting a new deal from your existing lender (known as a product transfer) or getting one from a new lender entirely (remortgaging).

   Locking in a PRODUCT TRANSFER

   Lenders often allow you to lock in a new deal up to three to four months, sometimes six months, before your existing mortgage ends.

   Upfront fees aren't common, so you might not lose out if you later decide not to take the product transfer. But do double check, as it's unlikely you'd get the fee back if there is. If you do want to ditch the deal, do so at least 14 days before the rate is due to start – otherwise it's unlikely you'll be able to cancel.

   Our Mortgage Best Buys comparison tool allows you to see product transfer deals from your existing lender. Or use your lender's app/website for more info. 

   Product transfer lock-in windows by lender

   Lender	How far in advance can I lock in a deal?
   Barclays	Three months
   Halifax	Four months
   HSBC	Three months
   Lloyds	Four months
   Nationwide	Four months
   NatWest	Four months
   Santander	Four months
   Virgin Money	Four months

   Product transfer lock-in windows by lender

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   Locking in a REMORTGAGE

   You'll often be able to do this up to six months before your current deal ends.

   But it's more likely you'll need to pay valuation, arrangement and legal fees upfront to lock in a remortgage deal – check if these are due upfront as you might not get them back if you later ditch the deal. If you do want to ditch it, do so at least 14 days before the rate is due to start – otherwise it's unlikely you'll be able to cancel.

   Could I lose out financially if I ditch the deal later?

   The main risk with locking in a product transfer or remortgage early is if better deals emerge in the meantime then arguably you'd have been better off to wait.

   The main financial cost then comes if you dump the reserved deal for a new one, as you'd lose any fees paid upfront – in which case, you should see this money as an 'insurance' against rates having risen after you locked in the deal.

   The counter to this is, if rates do rise after you lock in a new deal, you're quids in, because you've already secured yourself a good rate.

   If you ditch a locked-in rate for a new one, in addition to potentially losing any fees paid upfront for the old deal, you'll likely have to pay fees for the new deal.

   Use a broker to help you figure out if locking in is right for you

   Many factors (not just rates) affect what's your best deal. So first enter your info into our Mortgage Best Buys comparison tool to get a benchmark for your top deal.

   But then we suggest using a broker to proceed further, unless you're a mortgage expert (see our guide on finding a top mortgage broker). We say this because:

   • Lenders sometimes vary how long you can lock in a rate for, even within their own range. Brokers are likely to know which rates you can hold for months.

   • It's best to lock in a deal with little or no upfront cost before the rate starts. Brokers will know more about which mortgage deals this applies to.

   • There are risks and outcomes to consider. A broker can advise about these.

   • Brokers have info that's difficult to find, such as lenders' credit and affordability criteria. This can ease acceptance by helping match you to the right deal.

   Quick questions

   Here are some of the fees you might pay to lock in a new deal – though often you can get away without paying any of them upfront.

   • Arrangement fee. Some lenders charge a lot (£1,000ish plus); some nothing. Where there is a fee, in most cases you won't have to pay it until mortgage completion, so it shouldn't pose a risk to locking in a rate.

   • Legal and valuation fees. Many lenders throw these in free on remortgages, while they're uncommon with product transfers. If not, they can hit £1,000+, but it often depends on your home's value.

   • Broker fee. If you use a broker that charges a fee, you might only need to pay it once the mortgage rate starts. In this scenario, there's no risk of losing the fee if you pull out before completion.

   • Booking fee. Rare these days, but some lenders charge an 'application' or 'reservation' fee. Where yours does, it's likely to cost between £100 and £250. This'll need to be paid on application and will probably be non-refundable, so you'll likely lose it if you ditch a deal you've locked in.

   See our Mortgage fees guide for more on how these fees work.

   Normally if you lock in a rate early with a lender this will be a binding offer. It would be "unusual" for a lender to back out, brokers have told us.

   Technically it is possible for a lender to renege on a new deal. However, you should only worry about this if you suspect the lender will have real doubts about your affordability later down the line.

   Lenders tend to carry out final affordability checks just before a mortgage deal commences. If your financial circumstances have changed significantly since locking in the deal, it's possible the lender might pull out.

   • What if I lose my job or my salary drops after locking in a deal? If that happens, you're obliged to tell the lender before the mortgage starts. It might mean the mortgage offer is pulled.

   • What about other changes of circumstances, like divorce? You're obliged to inform the lender of changes like this and it may pull the offer.

   • Does this affect my credit history? Each time you apply for a mortgage there'll be an application search of your credit file. So if you dump a deal and apply for another, that can impact your credit history.

   Which fees might I pay upfront?

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   I've locked in a deal early – could the lender back out before it starts?

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   AVOID DOUBLE BOOKING: If you lock in a product transfer but later decide to remortgage, remember to cancel the product transfer – or you risk having two new deals start simultaneously (which could mean shelling out £1,000s in an early repayment charge).

2. Check your credit report BEFORE lenders do

   You need to convince lenders you've got the financial discipline required to repay a mortgage. One way they investigate this is by searching your credit report to see if you've a good repayment history – the main credit reference agencies who provide that report being Experian, Equifax and TransUnion.

   A credit report lists your history with credit cards, loans, overdrafts, mortgages, phone contracts, some utility usage and – increasingly – buy now, pay later. It covers all accounts that have been open at any point in the past six years.

   Checking your own credit report is free to do. It's worth checking your report from all three agencies, as you don't know which one(s) a mortgage lender will check, so ensure they're all up to scratch.

   Also consider signing up to MSE Credit Club. It not only offers free access to your TransUnion credit report but also provides an estimate of what we call your 'Credit Eligibility Rating'. Plus it indicates how much a mortgage lender might lend to you.

   Afterwards, but before applying for credit, see how to Improve your credit report.

   Quick questions

   The data on your credit report comes from five main sources:

   • Electoral roll. Publicly available, this contains address details.

   • Court records. County court judgments and bankruptcies indicate if you have a history of debt problems.

   • Search, address and linked data. This includes records of other lenders that have searched your file when you've applied for credit, addresses you're linked to or people you've a financial association with.

   • Fraud data. If you've committed fraud (or someone has stolen your identity and committed fraud) this will be reflected on your report.

   • Account data. Banks, building societies, utility companies and other organisations keep details of your payments and transactions on credit cards, loans, mortgages, bank accounts, energy and phone contracts.
     

     Payday loans are normally reported as is any 'doorstep lending'. Increasingly, buy now, pay later usage is also reported.
     

     Credit reference agencies usually know:

     • How much you owe

     • How long you've had the relationship for

     • A record of the last 12 months' payments

     • The final outcome and date of any closed financial accounts

     • Any defaults or county court judgments in the last six years

     • Whether you're bankrupt or in a formal debt relief plan

   While credit files hold an enormous amount of financial data, there are plenty of things about you NOT listed on your report. These include:

   • Child Support Agency payments

   • Council tax arrears

   • Race, religion, colour, medical history or criminal record

   • Information about relatives (unless you've got a joint financial product)

   • Parking or driving fines

   • Salary

   • Savings accounts

   • Student loans (unless taken out pre-1998).

   • Old defaults or missed payments from six+ years ago

   What IS recorded on my credit report?

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   What ISN'T recorded on my credit report?

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3. Can you borrow the amount you need?

   Lenders need to be sure you can afford the mortgage repayments. Different formulas are used to calculate this and how much you can borrow, but in brief:

   • A lender adds up your basic salary and any other types of income. Normally this includes any bonuses, commission, benefits and second jobs.

   • It then looks at your debts and outgoings. Debt repayments, maintenance payments, school fees, utilities, food shopping, etc – to work out your disposable income. This needs to cover mortgage payments at current interest rates AND in the event rates were to rise. The lender may reduce how much it's willing to lend if it's not sure you could afford the mortgage.

   To estimate how much you might be able to borrow, have a read of our How much can I borrow? guide – though only see it as a rough indication.

4. Pick your remortgage date carefully to avoid fees

   

   Many mortgage deals come with an early repayment charge that kicks in if you leave the deal before it ends (for example, if you remortgage during the life of the deal).

   If yours doesn't, you're free to remortgage at any time.

   If it does, remortgage for the next working day after your current deal ends. That way you won't have to pay the charge.

   If that's not for a while, and you have reason to remortgage other than reaching the end of your current deal, find out how much the charge is (it can be £1,000s). This way, you can work out if it's financially viable ditching your current deal.

5. Get the exact figure you still owe on your mortgage so you don't end up with a shortfall

   Don't just guess. Ask your lender "How much would I need to pay to clear the mortgage on, for example, 1 December?"

   This means the lender should take into account any mortgage repayments you're due to make between now and then (tell it if you plan any overpayments). You'll then have an exact amount you need to borrow to remortgage. Don't rely on your own rough estimate – it can mean ending up with a shortfall or pricier remortgage.

   You should also ask:

   • Does that include an early repayment charge? If so, how much and on what date could I repay the mortgage without a charge?

   • Does that include any other fees? Such as an 'exit fee' or 'deeds release fee'? If so, how much is it?

   The lender should only charge you fees to leave a deal if you were told about them when you first took out the deal (on the offer document and Key Facts Illustration).

   For more on remortgaging fees, see our How much will remortgaging cost? guide.

6. Self-employed? It can be tougher to remortgage...

   

   If you're self-employed or would struggle to prove your long-term income – perhaps you've worked abroad or you are on a temporary contract – then remortgaging can be tough.

   You'll need cast-iron proof of your income and evidence to show how your business is faring. You'll also need to show:

   • Business accounts. Preferably three years of accounts – though two is normally enough – usually signed off by a chartered accountant.
     
     Or if not...

   • Tax returns. Two or three years' tax returns are the next best option.

   You'll be assessed on net profits, not turnover. If this is likely to be complex, a mortgage broker can explain which lenders require what evidence. 

   While this can work for those in established businesses, if you've become self-employed since getting your last mortgage you might struggle to remortgage.

   For more information, see our Self-employed mortgages guide.

7. Estimate your property's value

   Before looking at mortgage rates, you need to value your property. This needs to be realistic as lenders will instruct an independent valuer to confirm the figure.

   See our Free house price valuations guide for help valuing a home.

8. Now calculate your loan-to-value (LTV)

   

   Once you've worked out your property's value, you can calculate the proportion you still owe on your mortgage and what you've built up in equity. The ratio between these is called loan-to-value (LTV).

   To get this figure: divide the amount you owe on your mortgage by your home's current value and multiply that figure by 100 – that's your LTV as a percentage. So, if you owe £225,000 on a £300,000 home, your LTV is 75%.

   Bear in mind your LTV could be significantly different from when you got your last mortgage. If your property's gone up in price, you'll likely have dropped an LTV band or two. If it's now worth less, you may be in a higher LTV band.

   LTV is important. The more equity you have in your property (the amount you own debt free) then the lower your LTV, and the lower your LTV then the lower an interest rate you'll be be able to get when remortgaging.

   You can remortgage to release equity if you need extra cash (say for home renovation). But this means borrowing more than you currently owe, so is risky as you'll pay more each month and will pay the debt off for longer. 

9. Drop an LTV band to get a cheaper mortgage

   The more you can do to drop an LTV band, the cheaper your remortgage will be. The main bands where interest rates drop are at 90%, 80%, 75% and 60% LTV.

   There are two things you can do to get into a lower LTV band:

   1. Borrow less. Putting some savings in at the point of remortgaging is worth considering if you're really close to the next band.

   2. Get a higher valuation figure. How much extra would your property need to value at to drop you an LTV band? It might be just an extra £1,000 of value.

   
   Quick question

   This is more art than science – these tips might work, they might not:

   • Set the valuer's expectation high. Always put the top valuation you think the property could achieve on your application.

   • Take a good look at your home. Does it look tidy and well cared for?

   • Be at the valuation (if it's in-person). This might not be an option if the valuer turns up without an appointment or simply relies on the internet.

   • Give the valuer comparisons. Tell the valuer about similar properties that sold for big money. Valuers often rely on these 'comparisons'.

   A word of warning here. Hope for the best, but prepare for the worst. You need to be ready for the valuer not agreeing with your figure.

   If this happens and it pushes you into a different LTV band, you might find the lender you've applied to doesn't offer the best rate for your new LTV, so it could be worth applying to another lender. Though weigh up the cost of any delays or fees you've paid upfront before jumping ship.

   How can I get a higher valuation figure?

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10. Sort out your finances

    

    There are a few things you should and shouldn't do in the weeks and months before remortgaging:

    • Don't apply for new credit just before a mortgage.

    • Avoid erratic or heavy spending.

    • Stay out of your overdraft.

    Lenders like to see you're managing your money well, and – more importantly – that you have enough cash to repay them each month. Buying large items and dipping in and out of your overdraft won't mark you as a reliable borrower.

11. Prepare your paperwork to speed up the process

    Remember the paperwork and evidence you had to gather when you applied for your first mortgage? You've got to produce it all again when remortgaging...

    Get ready a few weeks in advance, as a lender may want to see any, or all of:

    • Your last three months' bank statements.

    • Your last three months' pay slips.

    • Your last three years' accounts/tax returns (if self-employed).

    • Proof of bonuses/commission.

    • Your latest P60 tax form (showing income and tax paid from each tax year).

    • ID documents (usually a passport).

    • Proof of address (for example, utility bills or credit card bills).

    Sending the required paperwork in one batch can speed up the process and reduce the chance of your application being reviewed by more people.

12. Rejected? DON'T just reapply

    

    If you're rejected for a remortgage – FREEZE! Don't automatically apply again with a different lender. Too many applications will mess up your credit score, so don't do it. Instead, the first thing to do is to check your credit file again. Could you have missed something?

    Avoid the rejection spiral, which can work like this:

    • You apply for a remortgage, but...

    • You get rejected (sometimes falsely, due to an error), so...

    • You apply elsewhere, and...

    • You get rejected again.

    This continues, until finally you check your files and get the error corrected. So...

    • You apply again, but...

    • You're rejected because of recent 'searches'.

    So if you're rejected, check your credit file again, or you may mess up your score (more applications mean more searches, which compounds the problem).

    If you haven't missed anything and your credit report's looking good, it could just be the lender had its own reason for turning you down. It's worth asking the lender why. It should indicate to you the main reason you were turned down.

    Looking for more mortgage help?

    • Product transfers. You don't have to switch lender to get a new mortgage deal.

    • Cheap mortgage finding. How to find a mortgage broker.

    • Mortgage Best Buys. Find today's top rates.

    • Should you remortgage? What to ask yourself before remortgaging.

    • Remortgage guide. How to get the best remortgage deal.