If you own a home or property in the UK, you may have heard the term remortgaging but may not be sure what it means or whether it could help you save money.
With interest rates changing and new mortgage deals becoming available, remortgaging can be a useful way to reduce your monthly mortgage payments or lower your overall mortgage costs.
In this guide, we explain what remortgaging is, how it works, how it applies to different types of mortgages, and when it may help UK homeowners and landlords save money.
Whether you have a fixed rate mortgage, a variable rate mortgage, a residential mortgage or a buy-to-let mortgage, understanding remortgaging can help you decide whether it is worth reviewing your options.
What Is Remortgaging?
Remortgaging means switching your current mortgage deal to a new one. This is usually done with a different lender, but it can sometimes be arranged with your existing lender.
You do not have to move house to remortgage. It is a financial decision made on your current property.
Remortgaging can help you:
- Reduce your monthly mortgage payments
- Get a better mortgage interest rate
- Access additional funds for home improvements or other needs
- Change the length of your mortgage term
- Move away from your lender’s standard variable rate
- Review whether your current mortgage still suits your circumstances
For many UK homeowners, remortgaging becomes important when their current mortgage deal is coming to an end.
How Can Remortgaging Save You Money?
The most common reason people remortgage is to try to get a better interest rate.
When you first took out your mortgage, you may have been offered a special rate, such as a fixed rate for two, five or ten years. Once that deal ends, your mortgage may move onto your lender’s standard variable rate, often known as the SVR.
The SVR can sometimes be higher than the rates available on new mortgage deals. This means your monthly payments could increase if you do not review your options before your current deal ends.
Remortgaging could help you save money if:
- Your current mortgage deal is ending soon
- You are already on your lender’s standard variable rate
- New mortgage rates are lower than your current rate
- Your property value has increased
- Your credit profile has improved
- Your loan-to-value has reduced
- You want to restructure your mortgage term
However, remortgaging does not automatically save money for everyone. It is important to compare the potential savings against any fees or charges.
Fixed Rate vs Variable Rate Mortgages
When looking at remortgage options, you will usually need to consider whether a fixed rate mortgage or a variable rate mortgage is more suitable.
| Mortgage Type | How It Works | Possible Benefit | Key Point to Consider |
|---|---|---|---|
| Fixed Rate Mortgage | Your interest rate stays the same for a set period, such as 2, 5 or 10 years | Monthly payments remain predictable, which can help with budgeting | You may have early repayment charges if you leave the deal early |
| Variable Rate Mortgage | Your interest rate can go up or down, often linked to lender changes or wider market conditions | You may benefit if rates fall | Your payments can increase if rates rise |
| Standard Variable Rate | This is the rate many borrowers move onto after their initial deal ends | It may offer flexibility | It can often be higher than available new deals |
| Tracker Mortgage | The rate usually tracks the Bank of England base rate plus a set percentage | Payments may fall if the base rate falls | Payments may rise if the base rate increases |
If you are on a variable rate and mortgage rates have been rising, switching to a fixed rate mortgage may help protect you from further payment increases.
If rates have fallen, moving to a new fixed rate or a suitable variable rate deal could help reduce your monthly mortgage payments.
Different Types of Mortgages and Remortgaging
Remortgaging can apply to different mortgage types. The right option depends on whether the property is your home or an investment property.
Residential Mortgages
Most homeowners in the UK have a residential mortgage. This is a mortgage on the property you live in.
If you are coming to the end of a fixed rate deal, or your lender’s standard variable rate is high, it may be worth exploring residential remortgage options.
You may be able to find:
- A lower mortgage rate
- A new fixed rate deal
- A more suitable mortgage term
- A product transfer with your current lender
- A remortgage deal with a different lender
Example: Sarah’s Fixed Rate Savings
Sarah took out a 5-year fixed rate mortgage at 3.5%.
Now, 4 years later, rates available for her circumstances have dropped to around 2.5%.
If she remortgages to the new 2.5% rate for another 5 years, she could lower her monthly payments by approximately £100, saving around £1,200 a year.
This is an illustrative example only. Actual savings depend on the mortgage balance, term, fees, property value, lender criteria and personal circumstances.
Buy-to-Let Mortgages
Landlords often have buy-to-let mortgages, which can work differently from residential mortgages. Buy-to-let mortgage rates may also be higher than residential mortgage rates.
For landlords, remortgaging may help improve rental yield by reducing mortgage costs.
A buy-to-let remortgage may be considered when:
- The current mortgage deal is ending
- The interest rate is no longer competitive
- Rental income needs to cover higher costs
- The landlord wants to release equity
- The property value has changed
- The landlord wants to review their portfolio
Example: Mark’s Buy-to-Let Benefit
Mark owns a buy-to-let property with a mortgage interest rate of 4.2%.
After market changes, lenders now offer rates around 3.1% for his mortgage type.
By remortgaging, Mark could save around £150 per month, helping his rental income cover more of the property’s expenses.
This is an illustrative example only. Buy-to-let mortgage approval depends on lender criteria, rental income, loan-to-value, tax position and affordability checks.
When Should I Consider Remortgaging?
There are a few key moments when remortgaging may be worth considering.
| Situation | Why It Matters | Possible Action |
|---|---|---|
| Your current deal is ending | Your mortgage may move onto the lender’s standard variable rate | Review remortgage options before the deal ends |
| You are already on an SVR | Your payments may be higher than necessary | Compare available mortgage deals |
| Interest rates have changed | Your current deal may no longer be competitive | Check whether a new deal could reduce costs |
| Your property value has increased | Your loan-to-value may have improved | You may qualify for better rates |
| Your credit profile has improved | You may have access to more lenders | Review your eligibility |
| You want to borrow more | You may want funds for renovations or other needs | Check whether additional borrowing is suitable |
| You want payment certainty | Variable payments may feel uncertain | Consider whether a fixed rate could help |
Many homeowners start reviewing their remortgage options around 6 months before their current deal ends. This can give enough time to compare lenders, check costs and avoid moving onto a higher rate unexpectedly.
Costs to Consider When Remortgaging
While remortgaging can save money, it is important to remember that there may be costs involved.
Common remortgage costs can include:
- Early repayment charges
- Arrangement fees
- Product fees
- Valuation fees
- Legal fees
- Broker fees, where applicable
- Exit fees from your current lender
This is why it is important to calculate the full cost of remortgaging, not just the interest rate.
A lower rate does not always mean the cheapest option if the fees are high. The right deal should be assessed based on your full mortgage situation.
Remortgaging Cost vs Saving Example
| Item | Example Amount |
|---|---|
| Current monthly mortgage payment | £950 |
| New monthly mortgage payment | £850 |
| Monthly saving | £100 |
| Annual saving | £1,200 |
| Arrangement fee | £999 |
| Estimated first-year saving after fee | £201 |
This example shows why it is important to compare both the monthly saving and the upfront costs.
In some cases, the savings may outweigh the fees. In other cases, staying with your current lender or choosing a different product may be more suitable.
Practical Steps to Remortgage
If you are thinking about remortgaging, these steps can help you understand the process.
- Check your current mortgage
Look at your current mortgage balance, interest rate, remaining term and any early repayment charges.
- Find out when your deal ends
Knowing your deal end date can help you avoid moving onto your lender’s standard variable rate.
- Review your property value
Your property value can affect your loan-to-value, which may influence the mortgage rates available to you.
- Compare mortgage deals
You can compare remortgage deals from different lenders or speak with a mortgage broker for advice.
- Calculate costs vs savings
Include all fees, monthly savings and any early repayment charges before making a decision.
- Apply for the new mortgage
Once you choose a suitable deal, you can submit your mortgage application.
- Complete the remortgage
Your new lender pays off your old mortgage, and your new mortgage deal begins.
Can Remortgaging Help You Release Equity?
Remortgaging is not only used to save money. Some homeowners remortgage to release equity from their property.
This means borrowing more against your home, often for purposes such as:
- Home improvements
- Debt consolidation
- Helping family members
- Property investment
- Major life costs
However, increasing your mortgage balance means you may pay more interest over time. It can also increase your monthly repayments and affect affordability.
You should always seek advice before borrowing more against your home.
Is Remortgaging Suitable for Everyone?
Remortgaging can be useful, but it is not suitable for everyone.
It may not be the right option if:
- Your early repayment charge is too high
- Your credit position has worsened
- Your property value has fallen
- You plan to move home soon
- The fees outweigh the savings
- You cannot meet the lender’s affordability checks
This is why getting proper mortgage advice can be helpful. A mortgage adviser can look at your full situation and help you understand whether remortgaging makes financial sense.
Final Thoughts: Can Remortgaging Save Me Money?
Remortgaging can be a smart way to save money on your mortgage payments, especially if your current deal is ending or interest rates have changed.
It can apply to residential homeowners and buy-to-let landlords. It can also involve fixed rate mortgages, variable rate mortgages or product transfers with your existing lender.
However, remortgaging should not be rushed. You need to understand the costs involved, compare suitable options and check whether the savings outweigh the fees.
The key question is not just, “Can remortgaging save me money?”
The better question is, “Will remortgaging save me money after fees, charges and long-term costs are considered?”
Ready to See if Remortgaging Can Save You Money?
If you are thinking about remortgaging or want to explore your options, the expert team at BSL Financials can help you review your mortgage deal and understand what may be suitable for your circumstances.
Get in touch to talk through your mortgage goals.
No pressure. Just clear, honest mortgage advice.
BSL Financials – Helping you navigate the mortgage market with confidence.
Contact us today to learn more.
Important Information
Your home may be repossessed if you do not keep up repayments on your mortgage.
Remortgaging is subject to lender criteria, affordability checks, credit status and property valuation. The examples in this guide are for illustration only and are not a guarantee of savings or mortgage approval.
