Remortgage

Remortgaging is the process of replacing an existing mortgage on a property with a new one. The most common reasons to remortgage are: to access a more competitive interest rate (typically when the existing fixed term ends and the product reverts to a Standard Variable Rate); to release equity by increasing the mortgage balance; or to switch to a different loan type (e.g., from interest-only to repayment).

For buy-to-let investors, remortgaging is also the primary mechanism for accessing equity to fund further property purchases. As property values rise and mortgage balances reduce (on repayment mortgages) or remain static (on interest-only), the LTV falls. Remortgaging at a higher loan amount (but still within an acceptable LTV) releases the accumulated equity as cash.

The process of remortgaging involves: selecting a new mortgage product (via a broker or direct lender approach), providing evidence of rental income and the property's current value, passing the lender's ICR test at the new loan amount, and completing the legal transfer (if switching lenders).

Costs involved: broker fee (if using one), arrangement fee on the new product, and legal fees if switching lenders (typically £300-£500 for standard remortgages). If staying with the same lender, a product transfer is simpler and cheaper.