Remortgages

Remortgaging is something that almost all mortgage borrowers have to do, apart from those with enough money to pay off the entire loan, or borrowers who choose long-term fixed-rate mortgages.

The process is generally relatively simple. Many borrowers remortgage every few years to get the best rates, but following the housing crash, many lenders have tightened up their requirements for remortgages and homeowners may need a certain amount of equity before a deal can be approved.

Most homeowners remortgage when their current mortgage deal has come to an end or when they need to move house. But others do so to take out a bigger mortgage, which in turn helps to pay for home improvements or extensions.

If your previous mortgage deal is coming to an end, you'll automatically be put onto your lender's standard variable rate (SVR). However, this may not be terribly competitive and as a result, you'll need to check there's not a better mortgage deal out there for you. That said, an odd quirk of the recent recession has been that some SVRs have actually been competitive deals for homeowners, but once the base rate starts rising above its historically low level of 0.5%, this will change. For the most part, homeowners will pay less on their monthly interest if they remortgage.

Some homeowners have also remortgaged to consolidate all their debt, as interest repayments on mortgages tend to be lower than other types of debt. However, borrowers should be aware that this could significantly increase the cost of their monthly repayments and probably increase the term of their mortgage, so they shouldn't get into the habit of remortgaging simply to pay for unnecessary spending.  

If your current deal is coming to an end, scour the market to see if there is another attractive deal out there for you. Remember to start looking early - you can generally reserve a rate between three and six months in advance.