What is remortgaging and how does it work?

We know owning a home comes with a lot of big questions, especially when your current mortgage deal is coming to an end. Knowing what type of mortgage to consider, when the best time is to remortgage and what kind of deals are available can be difficult to navigate. 

Ultimately, the goal is to avoid moving to your current lender’s standard variable rate and lock in a new deal at the best rate.

There are benefits to planning for your remortgage well before your existing deal ends. It’s important to feel clued up about your remortgaging options so that you don’t end up on the Standard Variable Rate (SVR), a usually higher ‘follow on’ rate that lenders move you onto when your deal expires. 

With Monzo, you can see your mortgage from any lender in the app. Now, we've also partnered with the regulated online mortgage broker, Better.co.uk to help you plan for and navigate every stage of the remortgaging process.

Remortgaging is a commonly used phrase for what is essentially replacing your current mortgage agreement with a new one.

‘Remortgaging’ refers to switching to a new mortgage deal with a different lender than the one your current deal is with. 

You can also do what’s called a ‘product transfer’ or ‘rate switch’. This is when you stay with the same lender and move onto a new deal (and likely a different rate) with them. 

The full remortgage process generally takes 4-8 weeks from application to completion. 

Most lenders allow you to apply for a new mortgage deal up to 7 months before your current deal ends. However, starting earlier gives you time to consider your options and start doing your research to prepare for any opportunities to secure the best deal.

It’s worth noting that product transfers are usually faster than if you were to switch lenders. 

This is because: 

However, it’s always a good idea to compare with the other deals in the market to ensure you’re not missing out on a better deal. 

A product transfer and a remortgage with a new lender both involve updating your mortgage, but they differ significantly in process, complexity, and requirements. 

Whether it’s your first time moving to a new deal, or your first time exploring your remortgage options, here’s what to expect from the process with Monzo and Better.co.uk. 

Step 1: Do your research

If you’re reading this blog, you’re already at this stage.

You’ll want to understand your current situation before speaking to a mortgage advisor or submitting a remortgage application. 

You can do this by understanding your equity, knowing the current interest rates on offer and familiarising yourself with some key mortgage terms like loan to value.

If you have Monzo, then you can see estimated mortgage rates to understand what interest rates you might be offered when you remortgage, based on your current info.

Step 2: Speak to an expert

Once you’ve done your research, you’re ready to speak to a mortgage advisor. We’ve partnered with Better.co.uk to give you direct access to mortgage experts, in an app you’re already familiar with – for free!

If you’ve connected your mortgage in Monzo, then we can share your existing property and mortgage details with them, making your application even quicker and easier. We can connect you to an adviser at a time that works for you within minutes and hours, not days and weeks. 

Step 3: Review your options

As soon as you’ve spoken with one of Better.co.uk’s expert advisers, they’ll search the market for 1000s of deals from 100s of lenders, doing the hard work for you. They’ll send you up to 5 of the best matched deals recommended for you. Then you’ll choose which deal is best for you.

At this stage, you’ll decide whether you’d like a product transfer with your current lender or a remortgage with a different lender. The process differs depending on what you decide.

Scenario A: You choose a product transfer with your current lender

If you're staying with your current lender, your application is much simpler. This is because there are usually no new affordability checks, valuations, or legal work involved.

You’ll be able to secure your new deal faster as completion often takes days or a few weeks.

There may be some fees like a product fee charged by your lender, but there won’t be any legal or valuation fees.

Scenario B: You choose to remortgage with a different lender

If you're remortgaging, your application is more complex as you’re moving your mortgage to a new lender. However, Better.co.uk can help you see the progress of your application using their status tracking tool in the Monzo app. 

Step 4: Submit an application

Once you’ve chosen the best deal for you then Better.co.uk will guide you through the process letting you know if any documents are needed to submit your application. The application is very similar to the process for your original mortgage.

When you move to a new lender, then they’ll usually need to check your affordability, credit history and the current value of your home. 

Step 5: Sort the legal bits

If you choose to remortgage, you’ll need a solicitor (a general legal professional) or conveyancer (a legal professional that specialises in property law) to get involved to help you switch to your new lender.

Scenario A: Your new lender provides the legal professional

Some remortgages include a “free legals” package. This is when your lender selects a solicitor or conveyancer for you from one of their partner firms. They will reach out to you to get the process moving. One thing to remember is that whilst your lender covers most or all of the cost of the legal work, the legal process can be slower than appointing your own solicitor or conveyancer.

Scenario B: You provide the legal professional

If you’d like to provide your own solicitor or conveyancer, this can be appointed from a firm you’ve used in the past, a recommendation from mortgage brokers like Better.co.uk or find one yourself. You'll then get paid any cashback after completing; the cashback should cover most of the cost of your own legal work but you’ll have to pay for your fees yourself and wait until after completion.

Step 6: Get approval and remortgage

If your new lender accepts your application and the legal work is complete (normally in 4-8 weeks) then you’ll move over to your new mortgage deal and start making repayments to your new lender.

It’s helpful to think about your goals when it comes to remortgaging. Often, life events may mean that your current deal doesn’t suit your present or future needs, and reviewing your options can be a good way to find lower interest rates and better terms.

Remortgaging can help you with tactical goals, like consolidation of debts or increased cash flow to fund home improvements, up to bigger life goals, like reducing your term and paying off your mortgage sooner. It’s important to speak with a financial advisor or mortgage broker about your goals, and the implications of your next mortgage deal. 

If you set a deal reminder when you connect your mortgage in Monzo, we’ll let you know when it’s time to start planning for your remortgage.

Though you won’t be eligible to submit a remortgage application until 6 months before your current mortgage deal ends, you can start doing your research and considering your options up to 12 months before your deal ends. 

That can give you 6 months to consider different factors that can impact your eligibility to get a more competitive interest rate. Some of these include: 

We’ve got more blogs about different types of mortgages and improving your loan to value. 

You’ll need to download Monzo and connect your mortgage to get full access to all our homeownership tools.