What is an interest-only remortgage?

If you decide to remortgage an interest-only mortgage, then chances are you will be able to save some money if you switch to a better interest rate.

There are two usual scenarios for remortgaging an interest-only mortgage.

First is finding and switching to a better rate whilst retaining your interest-only agreement.

The alternative is switching completely from an interest-only mortgage to a repayment mortgage.

Repayment mortgages are the most popular mortgages presented by lenders these days.

It is worth noting that on an interest-only mortgage, you don’t make capital repayments on the amount you borrowed.

Instead, you are only paying off the interest. At the end of the lending term, the full amount that you initially borrowed is still payable.

It is for this reason that repayment mortgages are more popular with borrowers and lenders alike.

Recommended article: Check out the main reasons for remortgaging.

What is a repayment mortgage?

Put simply, with a repayment mortgage you repay the amount you borrowed over a number of years.

You make payments each month which are made up of capital repayment plus interest on the amount you borrowed to begin with.

The beauty of a repayment mortgage is that over time, the interest will reduce and your investment in the property will increase.

Are there any advantages to an interest-only mortgage?

The benefit of an interest-only mortgage is that the repayments are significantly lower than if you had a repayment mortgage.

This is attractive to many property investors.

However, whilst the lower payments may seem more attractive in the beginning, borrowers must have a plan to pay off the capital in full at the end of the lending term.

This is called an investment plan/vehicle.

For some people, this may involve putting the property on the market and selling up if no alternative method is available.

On the other hand, some investors have the misfortune of being left with a property in negative equity at the end of the borrowing term.

It may be possible to remortgage at the end of the preliminary rate period on an interest-only mortgage depending on certain criteria.

Many people opt for this as it is a means of raising money by borrowing against the value of the property.

Check Today's Best Rates >

Related quick help remortgage guides: 

• Remortaging on maternity leave 
• How soon can I remortgage?
• Shared ownership remortgages
• How long does it take to remortgage?
• How to remortgage for an extension

How do I repay an interest-only mortgage?

As mentioned before, an interest-only mortgage is just that, interest-only. No repayments are made on the capital.

The full amount borrowed at the beginning of the mortgage term is still owed and must be paid in full at the end of the mortgage term.

Some owners, mostly investors, rely on the sale of the property to repay the outstanding capital however others use savings or investments, even the sale of another property to settle the mortgage.

Most lenders will require a repayment strategy from you as proof of how you plan to gather the funds to clear the capital at the end of the mortgage term before agreeing to an interest-only mortgage.

You will have to prove to the lender that you have a repayment vehicle in place to pay back what you owe at the end of the mortgage term.

These repayment vehicles include:

• Stocks and shares ISA
• Endowment policies
• Investment bonds
• Pension schemes
• Stocks and shares
• The sale of another property
• Unit trusts

Each applicants’ circumstances are different and as a result, the lender may agree on alternative arrangements to those outlined above.

If you have any concerns about interest-only mortgages or have any concerns about your remortgage then please contact one of our specialist advisors who are on hand to answer any questions you may have.

It’s a good idea to familiarise yourself with the costs of remortgaging, especially remortgaging with bad credit since you are likely to be offered a higher interest rate.

Are the applications the same for interest-only remortgage and repayment remortgages?

An interest-only remortgage application is the same as a repayment mortgage application.

The only dissimilarity is that with an interest-only remortgage, you have to prove to the lender that you can repay the capital.

Some lenders will restrict what they lend you on a % LTV ratio. There are lenders on the market who no longer lend on an interest-only basis.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Interest-only remortgage rates

As with any mortgage application, the rates you will be offered on an interest-only remortgage will depend on a number of factors:

• Affordability and income (Lenders will take your earnings into account when making their decision)
• Credit History (Poor credit history may limit your options with some lenders)
• LTV ratio
• Repayment vehicle
• The lender
• Property Type (non-standard builds such as studio flats, or ex council builds may require a specialist lender)

Your Age, Property, etc may also have an impact on the mortgage you will be offered.

There are many comparisons for the best interest rates available online but if you would like to discuss todays current rates, make an enquiry with one of our interest rate specialists.

Switching from an interest-only to repayment mortgage

You may find that one of your repayment’s vehicles (e.g ISA, endowment) isn’t performing as well as you had expected it to.

If this happens, all is not lost, you may be able to renegotiate on an existing mortgage or even switch from an interest-only to repayment.

This is very much dependent on the lender though. Granted, your monthly payments will be higher, but you will be paying off the mortgage monthly. This should lessen the lump sum you are left with at the end of the mortgage term.

You don’t have to stay with your current lender. You can easily switch if you prefer. This is the best option for some, especially if you want to make any changes to your current mortgage terms e.g. borrow more money, switch from interest-only to repayment or simply renegotiate on any of the terms of your current mortgage.

If you meet the eligibility criteria to refinance your interest-only mortgage with a new lender it might be the best option.

You may qualify for a better deal than what you have with your current provider. Get in touch with us today to find out if you could be benefitting from a better deal.

Are part repayment and part interest only an option?

There are many options available to individuals on the mortgage market today and fortunately, this is one of them.

It is possible to have a part repayment, part interest-only mortgage. This is known as a ‘part and part’ mortgage and is suitable for many applicants.

Reason being, you will be paying off some of the mortgage and some of the interest resulting in lower repayments than if you were in a repayment only mortgage and also less of a lump sum due back to the lender at the end of the term.

Interest-only mortgages for the Over 65’s

Age is most definitely a factor in the mortgage process. However, don’t let that put you off as there are also lenders that have specialist interest-only remortgage options.  Borrowing is such a large part of life now and as life expectancy increases, there are more senior clients hunting the market for interest-only deals.

If you are approaching or over the age of 65 and would like to find out if you are eligible for an interest-only remortgage, contact one of our experts who will be able to help establish the right deal for you.

What if I have been declined for an interest-only remortgage?

If your application for an interest-only remortgage has been declined or if you haven’t been able to refinance on your current mortgage, whatever the circumstances, you can always discuss your options with a member of our team who will help you find the best option available to you on the current market.

When you have a mortgage, you are often tied to a deal that only lasts for a finite period of time, such as 2 or 5 years.

This means that once the term is over you will be transferred to your lenders base interest rate, which could see your monthly payments skyrocket.

That is why it is so important that you consider remortgaging in time before your current deal is finished.

There will be costs to remortgaging, but if you choose the right deal from the right lender, you can save yourself thousands over the course of your mortgage.

This is why it’s one of the most common reasons for remortgaging, it can save you a lot of money, other common reasons include to release equity, for home improvements or to buy new property.

The Costs of Remortgaging

There are a number of fees that come with remortgaging, so it is important to determine if the money you will save will outweigh the costs.

A lower monthly payment may seem attractive, but it could cost you dearly if you haven’t factored in the costs of remortgaging. Let’s take a look at some of the common remortgaging fees.

Early Repayment Charges

You will have to pay early repayment charges to your current lender if you choose to leave your existing mortgage deal before it is up. It is important you determine how big this fee may be as it may completely eclipse any savings you may make with a new mortgage.

Repayment charges vary depending on the type of mortgage you are currently on and how long you have been on it. Generally speaking, the early repayment charge reduces with the length of time on the mortgage.

For example, with a five-year tracker, the early repayment charge could be 5% (of the outstanding mortgage debt) in the first year, decreasing by 1% each year of the deal.

If the sums are a little complicated for you to work out, speak to your mortgage broker who will be able to talk you through all the numbers in a way that is easy to understand.

Deeds Release /Exit Fee

The Deeds Release/Exit Fee is paid to your existing lender.  Not all lenders will charge a Deeds Release/Exit Fee, but if yours does, you can expect to up to £300.

Arrangement Fees

The arrangement fee is charged by your new lender to set up the new mortgage and is non-refundable if something goes wrong. This fee will vary between lenders and could be a fixed fee or a percentage of the loan amount.

Usually, the better the interest rate the higher the arrangement fee, so you should discuss with your mortgage advisor if a low-interest rate is worth the high fee.

You can pay the arrangement fee upfront to your new lender or you can add it the cost of your mortgage. It should be noted that if you add the fee onto your mortgage, you will be paying interest on it for the entire mortgage term. So, if you can pay it upfront, you will save yourself money in the long run.  Some lenders have fee-free products.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Booking Fee
Also non-refundable, a booking fee is charged by some lenders to secure a good rate on your chosen remortgaging deal. This will be paid up-front to your new lender and is usually between £100 and £200.

Conveyancing Fee

Paid to your solicitor, the conveyancing fee covers the legal work required to transfer your mortgage from your old lender to your new lender. Your solicitor will also handle the payment of the outstanding debt to your existing lender.

Some remortgaging deals will include a free legal package, but in these cases, the lender chooses the solicitor and therefore you will not be guaranteed a swift and efficient service. The conveyancing fee usually comes in at around £300.

There may be additional conveyancing fees to be paid to your solicitor if you are remortgaging to buy out a partner or to add someone to the mortgage. Make sure you tell your solicitor this before they go ahead with the paperwork.

Valuation Fee

A valuation is required by a lender for security purposes so that they know that they can recoup their losses following repossession if you don’t keep up with the mortgage repayments. Many remortgage packages include a valuation for free, and unlike buying a new home, you won’t need to pay for a structural survey or a home buyer’s report.

If you are expected to pay for the valuation, the price will depend on the size and value of the property, but it usually costs between £200 and £400.

Mortgage Broker Fee

If you are remortgaging through a mortgage broker you may have to pay them a fee which can vary between a fixed fee or a percentage of the loan amount. A fixed fee is usually around the £300-£500 mark, but if you are paying your broker a percentage fee it can be quite expensive.

Just 1% of a £150,000 loan is £1,500.  If you have to pay your broker up-front and something goes wrong you will lose this money, so always ask if you can pay upon completion.

If you have bad credit, it’s still possible to secure a remortgage with bad credit, if you need assistance, don’t hesitate to contact us.

Check Today's Best Rates >

How to Reduce the Cost of Remortgaging

There are a number of things you can do to keep the costs of remortgaging as low as possible, they include:

• Shop Around – Don’t just take the first deal that you come across. Take a look at mortgages from a number of lenders until you find the best deal. That is where a mortgage broker adds value as they will do this for you.
• Stick with your Current Lender – Speak with your existing lender as they may be able to offer you a great new mortgage deal, which will avoid the fees incurred when switching to a new lender.
• Boost Your Credit Rating – As with any mortgage, the better your credit rating, the better remortgage deals you will be offered. Obtain a copy of your credit report and learn more about your financial history to discover where you can make improvements.

When you have a mortgage, you are often tied to a deal that only lasts for a finite period of time, such as 2 or 5 years.

This means that once the term is over you will be transferred to your lenders base interest rate, which could see your monthly payments skyrocket.

That is why it is so important that you consider remortgaging in time before your current deal is finished.

There will be costs to remortgaging, but if you choose the right deal from the right lender, you can save yourself thousands over the course of your mortgage.

This is why it’s one of the most common reasons for remortgaging, it can save you a lot of money, other common reasons include to release equity, for home improvements or to buy new property.

The Costs of Remortgaging

There are a number of fees that come with remortgaging, so it is important to determine if the money you will save will outweigh the costs.

A lower monthly payment may seem attractive, but it could cost you dearly if you haven’t factored in the costs of remortgaging. Let’s take a look at some of the common remortgaging fees.

Early Repayment Charges

You will have to pay early repayment charges to your current lender if you choose to leave your existing mortgage deal before it is up. It is important you determine how big this fee may be as it may completely eclipse any savings you may make with a new mortgage.

Repayment charges vary depending on the type of mortgage you are currently on and how long you have been on it. Generally speaking, the early repayment charge reduces with the length of time on the mortgage.

For example, with a five-year tracker, the early repayment charge could be 5% (of the outstanding mortgage debt) in the first year, decreasing by 1% each year of the deal.

If the sums are a little complicated for you to work out, speak to your mortgage broker who will be able to talk you through all the numbers in a way that is easy to understand.

Deeds Release /Exit Fee

The Deeds Release/Exit Fee is paid to your existing lender.  Not all lenders will charge a Deeds Release/Exit Fee, but if yours does, you can expect to up to £300.

Arrangement Fees

The arrangement fee is charged by your new lender to set up the new mortgage and is non-refundable if something goes wrong. This fee will vary between lenders and could be a fixed fee or a percentage of the loan amount.

Usually, the better the interest rate the higher the arrangement fee, so you should discuss with your mortgage advisor if a low-interest rate is worth the high fee.

You can pay the arrangement fee upfront to your new lender or you can add it the cost of your mortgage. It should be noted that if you add the fee onto your mortgage, you will be paying interest on it for the entire mortgage term. So, if you can pay it upfront, you will save yourself money in the long run.  Some lenders have fee-free products.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Booking Fee
Also non-refundable, a booking fee is charged by some lenders to secure a good rate on your chosen remortgaging deal. This will be paid up-front to your new lender and is usually between £100 and £200.

Conveyancing Fee

Paid to your solicitor, the conveyancing fee covers the legal work required to transfer your mortgage from your old lender to your new lender. Your solicitor will also handle the payment of the outstanding debt to your existing lender.

Some remortgaging deals will include a free legal package, but in these cases, the lender chooses the solicitor and therefore you will not be guaranteed a swift and efficient service. The conveyancing fee usually comes in at around £300.

There may be additional conveyancing fees to be paid to your solicitor if you are remortgaging to buy out a partner or to add someone to the mortgage. Make sure you tell your solicitor this before they go ahead with the paperwork.

Valuation Fee

A valuation is required by a lender for security purposes so that they know that they can recoup their losses following repossession if you don’t keep up with the mortgage repayments. Many remortgage packages include a valuation for free, and unlike buying a new home, you won’t need to pay for a structural survey or a home buyer’s report.

If you are expected to pay for the valuation, the price will depend on the size and value of the property, but it usually costs between £200 and £400.

Mortgage Broker Fee

If you are remortgaging through a mortgage broker you may have to pay them a fee which can vary between a fixed fee or a percentage of the loan amount. A fixed fee is usually around the £300-£500 mark, but if you are paying your broker a percentage fee it can be quite expensive.

Just 1% of a £150,000 loan is £1,500.  If you have to pay your broker up-front and something goes wrong you will lose this money, so always ask if you can pay upon completion.

If you have bad credit, it’s still possible to secure a remortgage with bad credit, if you need assistance, don’t hesitate to contact us.

Check Today's Best Rates >

How to Reduce the Cost of Remortgaging

There are a number of things you can do to keep the costs of remortgaging as low as possible, they include:

• Shop Around – Don’t just take the first deal that you come across. Take a look at mortgages from a number of lenders until you find the best deal. That is where a mortgage broker adds value as they will do this for you.
• Stick with your Current Lender – Speak with your existing lender as they may be able to offer you a great new mortgage deal, which will avoid the fees incurred when switching to a new lender.
• Boost Your Credit Rating – As with any mortgage, the better your credit rating, the better remortgage deals you will be offered. Obtain a copy of your credit report and learn more about your financial history to discover where you can make improvements.

Mortgages in themselves can seem rather complicated with the likes of fixed rates, variable rates, tracker mortgages, and more to contend with.

If you are a first-time buyer, you may be a little confused when your mortgage advisor mentions remortgaging in the future.

It is always wise to know your remortgage options, especially if you have a fixed rate mortgage, which can end in the space of a few years, resulting in a hike in your mortgage payments.

Numbers of remortgages are at the highest they have been for a decade, with homeowners determined to get the best deals they can.

With increasing uncertainty over Brexit and the potential rise in base rates, it is so important to know where you stand with remortgaging.

What is a Remortgage?

Put simply, a remortgage is taking out a new mortgage on a property you already own outright or have an existing loan on.

You have two options when it comes to remortgaging – either you go through a product transfer with your existing lender, or you can switch to a new mortgage provider.

• Product Transfer – Involves swapping deals with your current provider without actually borrowing any more money.
• Switching Lender – Your new lender will pay the funds that are released to the old lender through a solicitor, and then your mortgage with the new provider will continue.

Check Today's Best Rates >

Reasons to Remortgage

There are several reasons why you might consider remortgaging your property and the benefits to it could be really significant.  Put simply, remortgaging can drastically improve your finances.

You could save thousands on interest, fix your mortgage rate to protect against price hikes (really useful with the uncertainty of Brexit ), make payments more affordable, or release some equity. Let’s look at some of the main reasons to remortgage in more detail:

1. Remortgaging for a Better Rate

Switching to a different mortgage provider may involve paying a small exit fee to your current provider, or there may be an early repayment charge on your outstanding loan which could be as much as 5%.

However, these extra charges could be worth the cost as you could save a huge amount of money switching providers for a better rate, particularly if your loan is still very large.

Look into the rates other providers can offer and work out if you will be saving more money despite the charges you may have to pay to leave your current lender.

Related quick help remortgage guides: 

• Remortaging on maternity leave 
• How soon can I remortgage?
• Shared ownership remortgages
• How long does it take to remortgage?
• How to remortgage for an extension

It’s a good idea to familiarise yourself with the costs of remortgaging, especially remortgaging with bad credit since you are likely to be offered a higher interest rate.

2. Your Current Mortgage Deal is Ending

Fixed rate, tracker, or discount mortgages tend to only have a term of 2 to 5 years before it reverts to the lender’s standard variable rate (SVR), which can be much higher and can cost you thousands over time.

To avoid being transferred to the SVR, look for cheaper mortgages around 16 weeks before your current deal ends.

3. Borrowing Money on Your Mortgage

You may want to release some equity in your home, whether it is to pay for repairs, upgrading a kitchen and/or bathroom, or to pay off other existing debts.

Your current lender may have declined your request to loan more money. By switching mortgages you may be able to release some equity at a cheaper rate.

Your new lender will want to know why you are borrowing more money and may ask for evidence.

4. You Own More Equity

The longer you pay into your mortgage the more equity you will have in your home. Therefore, you may have the opportunity to get a cheaper deal with a remortgage at a lower LTV (loan-to-value) ratio than your current mortgage.

5. Switching Mortgage Type

Perhaps you are looking to switch to a repayment mortgage from an interest-only loan. The chances are that you won’t need to remortgage as your lender should easily be able to make the switch for you.

You may even have the option to keep some of the loans on your interest-only deal and switch part of it to capital repayment. It can be more difficult, however, to change from a capital repayment mortgage to an interest-only loan.

Perhaps you want a mortgage that is more flexible that allows you to take a payment holiday if you are changing jobs, travelling, studying etc. Maybe you have heard about the offset mortgages that combine your loan with your current account or savings.

Whatever flexibility you are looking for, there is a chance that there is a mortgage that fits your needs. However, you should be aware that you may pay a little extra for the option of flexibility, so be sure you only choose the optional extras that work for you. You can always revisit any other options you may need in the future.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

6. Release Equity for a Buy to Let

If the amount left on your mortgage is relatively small, remortgaging to release equity to purchase a buy to let is not a bad idea if you want to buy new property.

The release of equity can be used to place a deposit on a buy to let, which may work out much more cost effective as a buy to let mortgage typically have high interest rates.

As this new buy to let mortgage is certain to be larger than your current mortgage, you will need to prove to your lender that you can afford the repayments.

However, expected income from renting the new property may be taken into account when calculating your eligibility for a bigger mortgage.

Additionally, there could be periods of time where your buy to let property is empty, so you will need to show your lender that you a contingency plan to pay the mortgage with no rental income.

Similar principles apply if you are looking to release a lump sum from your current home to purchase an additional house. Your lender will want to know that you will be able to keep up with the higher repayments each month.

Check Today's Best Rates >

7. Remortgaging to Beat Base Rate Rises

All this uncertainty over Brexit does have a lot of lenders worried about how it may affect the Bank of England base rates.

With a variable rate mortgage, like a discount or tracker, your payments will increase significantly if the base rate continues to rise.

You may want to consider switching to a fixed rate mortgage, so you know what you will be paying each month, at least in the short term.

8. The Value of Your Home has Significantly Increased

The value of your property may have significantly increased – due to renovations or extensions – since you took out your current mortgage. This means that you could be in a lower LTV band and become eligible for lower interest rates.

If you think this may be the case, get in touch with our expert mortgage advisors to find you a new rate.

9. Change in Circumstances – Divorce

If you are divorcing or splitting with a partner that you have co-signed a mortgage with and you need to consider separating your finances. The shared home is usually the biggest asset that needs to be split and there are several options open to you.

Selling the house, paying off the loan and splitting any profit is one option, and allowing your partner to buy you out is another.

But, if you want to stay in the house you will have to take over the entire mortgage repayments and may need to buy out your partner.

If this is your chosen course of action you will need to contact your lender as soon as possible to see if it is possible to transfer the mortgage into your name only. Your mortgage provider will want to make sure that you can afford the payments on your sole income.

If you do not meet their eligibility criteria you may be able to secure a new mortgage with a different lender. Legal work and costs will apply for the change of name.

So, there you have it, all the reasons why you should always be considering your remortgaging options. You may be able to save yourself thousands of pounds over the course of your repayment term.

You can also make sure that you are always getting the best deal, improving your financial situation. If you are considering remortgaging, get in touch with your mortgage advisor today.

Use our mortgage broker service to get access to thousands of deals and not just the ones your bank recommends.

Reasons to Remortgage Main Takeaways

• A remortgage involves taking out a new mortgage on a property you own.
• Discuss your remortgaging options with our expert mortgage advisors
• Remortgaging can save you thousands of pounds, as well as releasing equity in your property, and improving your financial situation.
• You may get a better rate by remortgaging, avoiding the Standard Variable Rate of your current lender.
• Remortgaging can free up some capital to purchase additional homes to expand your property profile, but you will need to show lenders you can afford the additional payments.

Check Today's Best Rates >

Mortgages in themselves can seem rather complicated with the likes of fixed rates, variable rates, tracker mortgages, and more to contend with.

If you are a first-time buyer, you may be a little confused when your mortgage advisor mentions remortgaging in the future.

It is always wise to know your remortgage options, especially if you have a fixed rate mortgage, which can end in the space of a few years, resulting in a hike in your mortgage payments.

Numbers of remortgages are at the highest they have been for a decade, with homeowners determined to get the best deals they can.

With increasing uncertainty over Brexit and the potential rise in base rates, it is so important to know where you stand with remortgaging.

What is a Remortgage?

Put simply, a remortgage is taking out a new mortgage on a property you already own outright or have an existing loan on.

You have two options when it comes to remortgaging – either you go through a product transfer with your existing lender, or you can switch to a new mortgage provider.

• Product Transfer – Involves swapping deals with your current provider without actually borrowing any more money.
• Switching Lender – Your new lender will pay the funds that are released to the old lender through a solicitor, and then your mortgage with the new provider will continue.

Check Today's Best Rates >

Reasons to Remortgage

There are several reasons why you might consider remortgaging your property and the benefits to it could be really significant.  Put simply, remortgaging can drastically improve your finances.

You could save thousands on interest, fix your mortgage rate to protect against price hikes (really useful with the uncertainty of Brexit ), make payments more affordable, or release some equity. Let’s look at some of the main reasons to remortgage in more detail:

1. Remortgaging for a Better Rate

Switching to a different mortgage provider may involve paying a small exit fee to your current provider, or there may be an early repayment charge on your outstanding loan which could be as much as 5%.

However, these extra charges could be worth the cost as you could save a huge amount of money switching providers for a better rate, particularly if your loan is still very large.

Look into the rates other providers can offer and work out if you will be saving more money despite the charges you may have to pay to leave your current lender.

Related quick help remortgage guides: 

• Remortaging on maternity leave 
• How soon can I remortgage?
• Shared ownership remortgages
• How long does it take to remortgage?
• How to remortgage for an extension

It’s a good idea to familiarise yourself with the costs of remortgaging, especially remortgaging with bad credit since you are likely to be offered a higher interest rate.

2. Your Current Mortgage Deal is Ending

Fixed rate, tracker, or discount mortgages tend to only have a term of 2 to 5 years before it reverts to the lender’s standard variable rate (SVR), which can be much higher and can cost you thousands over time. To avoid being transferred to the SVR, look for cheaper mortgages around 16 weeks before your current deal ends.

3. Borrowing Money on Your Mortgage

You may want to release some equity in your home, whether it is to pay for repairs, upgrading a kitchen and/or bathroom, or to pay off other existing debts. Your current lender may have declined your request to loan more money. By switching mortgages you may be able to release some equity at a cheaper rate. Your new lender will want to know why you are borrowing more money and may ask for evidence.

4. You Own More Equity

The longer you pay into your mortgage the more equity you will have in your home. Therefore, you may have the opportunity to get a cheaper deal with a remortgage at a lower LTV (loan-to-value) ratio than your current mortgage.

5. Switching Mortgage Type

Perhaps you are looking to switch to a repayment mortgage from an interest-only loan. The chances are that you won’t need to remortgage as your lender should easily be able to make the switch for you.

You may even have the option to keep some of the loans on your interest-only deal and switch part of it to capital repayment. It can be more difficult, however, to change from a capital repayment mortgage to an interest-only loan.

Perhaps you want a mortgage that is more flexible that allows you to take a payment holiday if you are changing jobs, travelling, studying etc. Maybe you have heard about the offset mortgages that combine your loan with your current account or savings.

Whatever flexibility you are looking for, there is a chance that there is a mortgage that fits your needs. However, you should be aware that you may pay a little extra for the option of flexibility, so be sure you only choose the optional extras that work for you. You can always revisit any other options you may need in the future.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

6. Release Equity for a Buy to Let

If the amount left on your mortgage is relatively small, remortgaging to release equity to purchase a buy to let is not a bad idea if you want to buy new property. The release of equity can be used to place a deposit on a buy to let, which may work out much more cost effective as a buy to let mortgage typically have high interest rates.

As this new buy to let mortgage is certain to be larger than your current mortgage, you will need to prove to your lender that you can afford the repayments.

However, expected income from renting the new property may be taken into account when calculating your eligibility for a bigger mortgage.

Additionally, there could be periods of time where your buy to let property is empty, so you will need to show your lender that you a contingency plan to pay the mortgage with no rental income.

Similar principles apply if you are looking to release a lump sum from your current home to purchase an additional house. Your lender will want to know that you will be able to keep up with the higher repayments each month.

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7. Remortgaging to Beat Base Rate Rises

All this uncertainty over Brexit does have a lot of lenders worried about how it may affect the Bank of England base rates.  With a variable rate mortgage, like a discount or tracker, your payments will increase significantly if the base rate continues to rise. You may want to consider switching to a fixed rate mortgage, so you know what you will be paying each month, at least in the short term.

8. The Value of Your Home has Significantly Increased

The value of your property may have significantly increased – due to renovations or extensions – since you took out your current mortgage. This means that you could be in a lower LTV band and become eligible for lower interest rates.

If you think this may be the case, get in touch with our expert mortgage advisors to find you a new rate.

9. Change in Circumstances – Divorce

If you are divorcing or splitting with a partner that you have co-signed a mortgage with and you need to consider separating your finances. The shared home is usually the biggest asset that needs to be split and there are several options open to you.

Selling the house, paying off the loan and splitting any profit is one option, and allowing your partner to buy you out is another. But, if you want to stay in the house you will have to take over the entire mortgage repayments and may need to buy out your partner.

If this is your chosen course of action you will need to contact your lender as soon as possible to see if it is possible to transfer the mortgage into your name only. Your mortgage provider will want to make sure that you can afford the payments on your sole income.

If you do not meet their eligibility criteria you may be able to secure a new mortgage with a different lender. Legal work and costs will apply for the change of name.

So, there you have it, all the reasons why you should always be considering your remortgaging options. You may be able to save yourself thousands of pounds over the course of your repayment term.

You can also make sure that you are always getting the best deal, improving your financial situation. If you are considering remortgaging, get in touch with your mortgage advisor today.

Use our mortgage broker service to get access to thousands of deals and not just the ones your bank recommends.

Reasons to Remortgage Main Takeaways

• A remortgage involves taking out a new mortgage on a property you own.
• Discuss your remortgaging options with our expert mortgage advisors
• Remortgaging can save you thousands of pounds, as well as releasing equity in your property, and improving your financial situation.
• You may get a better rate by remortgaging, avoiding the Standard Variable Rate of your current lender.
• Remortgaging can free up some capital to purchase additional homes to expand your property profile, but you will need to show lenders you can afford the additional payments.

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How can you secure remortgage deals for bad credit?

Let’s be straightforward.

Whilst finding remortgage deals bad credit can be challenging, don’t lose heart. Securing a new mortgage with a less-than-perfect credit score isn’t out of reach.

Several specialist lenders offer best remortgage deals with bad credit, even if your credit history isn’t spotless and has a few complications.

Can I Remortgage With Poor Credit History?

Indeed, you can.

It’s crucial to understand that certain marks on your credit file carry different weights, and securing bad credit remortgage deals remains achievable.

Lenders tend to be more understanding if you’ve missed a single payment some time ago and can explain the circumstances.

However, if you’ve recently defaulted on multiple mortgage payments consecutively, lenders might be hesitant to trust your ability to maintain regular repayments.

Fortunately, different lenders employ varying criteria to evaluate your creditworthiness.

You’ll be pleased to discover that some lenders don’t even use credit scoring systems.

This means that whilst your current provider might not offer you a new deal, other lenders specialising in remortgage deals for bad credit might. Success lies in finding the right lender for your situation.

Does owning my property outright affect my application?

Generally not.

This scenario is known as an unencumbered mortgage and follows similar requirements to standard remortgages.

The outcome largely depends on your remortgaging purpose.

Essentially, bad credit remortgages on unencumbered properties undergo the same thorough assessment as conventional mortgages.

Bad Credit Remortgages – what are the common reasons?

There are numerous valid reasons to seek a remortgage, even with adverse credit.

These include:

• Debt consolidation. This involves combining your existing debts into your monthly mortgage payment. Often, this results in reduced interest rates on your outstanding debts, helping you clear them more efficiently.
• Home improvements. If your property requires significant improvements, remortgaging can provide the necessary funds for extensions, crucial repairs or that overdue kitchen renovation.
• Significant purchases. Perhaps you need to replace your vehicle? Or you’re considering property investment? Remortgaging can be an effective way to finance substantial purchases.

There are various other motivations; refer to our article on recent remortgaging trends for a comprehensive overview.

What constitutes adverse credit on your credit file?

Your poor credit rating could stem from various factors.

You might have historical missed payments or mortgage payment arrears.

Perhaps you’re currently following a debt management programme to address your outstanding obligations.

Each credit issue on your record will impact your credit report differently.

The more negative marks present in your history, the more hesitant financial institutions may be to extend credit to you.

Our expert advisors have successfully secured remortgage deals bad credit for clients facing various circumstances:

• Low credit score
• Late payments
• Mortgage arrears
• Defaults
• CCJs
• Debt management plans
• IVA
• Bankruptcy
• Repossession

Every adverse credit event appears on your credit report and affects your overall credit rating.

Whilst obtaining best remortgage deals with bad credit is achievable, it requires more effort and expertise.

The complexity of your application depends on several factors, including the nature of adverse events, their timing, and your property’s equity position.

Financial institutions scrutinise your credit history because past credit difficulties often indicate potential future challenges.

When seeking bad credit remortgage deals, lenders might be more cautious about approval, and if successful, typically offer higher interest rates.

Ring us today on 03330 90 60 30 or get in touch to speak with our knowledgeable advisors.

Nevertheless, each case is unique. Your specific circumstances might present more opportunities than initially anticipated.

Our experienced brokers will evaluate your situation thoroughly before matching you with suitable remortgage deals for bad credit.

This approach not only safeguards your credit score but also maximises efficiency.

Related quick help remortgage guides:

• Remortaging on maternity leave
• How soon can I remortgage?
• Shared ownership remortgages
• How long does it take to remortgage?
• How to remortgage for an extension

For detailed insights into how lenders assess specific adverse credit situations and how specialist providers can assist, continue reading below.

Remember that even specialist lenders exercise additional caution when considering remortgage applications with adverse credit history.

Lenders’ decision-making process typically considers these key factors:

• The loan-to-value (LTV) ratio – this represents your mortgage amount compared to your property’s value, expressed as a percentage. Generally, higher equity (lower LTV) and larger deposits lead to more favourable mortgage terms.
• Deposit – substantial deposits typically result in better mortgage offers.
• Income – the relationship between your borrowing amount and earnings is crucial. Most lenders typically cap lending at approximately 3.5 times your annual income.

Naturally, your unique circumstances, including your credit background and present financial position, will influence your application.

Let’s examine how various adverse credit situations might affect your remortgage application…

Can I Remortgage with no credit history?

Having no credit history means your credit report shows no borrowing activity within the past 7 years.

When seeking remortgage deals bad credit, lenders may view no credit history similarly to having poor credit.

Can I Remortgage with a low credit score?

Every lender conducts a thorough assessment of your credit history before determining your eligibility for best remortgage deals with bad credit.

Whilst a low credit score or unfavourable credit history may limit your options with mainstream lenders, solutions are available.

Although a low credit score doesn’t automatically disqualify you from remortgaging, you’ll likely need to pursue specialist lending options.

Several providers specialise in bad credit remortgage deals, making it essential to consult a comprehensive market mortgage adviser.

This approach is preferable to submitting multiple applications to different banks, which could further damage your credit rating.

Can I remortgage with late mortgage payments or missed mortgage payments?

When seeking remortgage deals for bad credit, mortgage payment arrears can pose significant challenges, particularly if combined with other credit issues.

Lenders consider late or missed mortgage payments particularly concerning, as they suggest potential difficulties in maintaining future repayments.

Your chances of securing a remortgage with arrears will vary based on how long ago they occurred and your available equity.

Specialist adverse credit mortgage providers may offer solutions even with recent arrears on your record.

Can I Remortgage with CCJs?

The market now includes more lenders willing to consider applicants with County Court Judgements (CCJs).

Having CCJs doesn’t automatically prevent remortgaging, with timing being a crucial factor.

Your chances of remortgage approval typically improve the longer it has been since the CCJ was registered.

Lenders will evaluate both the quantity of CCJs and their settlement status when considering adverse credit remortgage applications.

Can I Remortgage with IVAs?

Remortgage eligibility with an Individual Voluntary Arrangement (IVA) varies depending on whether it’s current or historical.

An active IVA may restrict your remortgaging options, though lenders often show more flexibility as you’re not seeking additional credit.

Securing a remortgage during an IVA is feasible, and it might even provide a means to settle the IVA completely.

However, for those seeking remortgage deals bad credit with an active IVA, you’ll need to demonstrate consistent mortgage payment history for a minimum of 12-24 months to satisfy lender requirements.

For personalised guidance on best remortgage deals with bad credit, consult a specialist advisor or lender experienced in adverse credit mortgages to assess your eligibility.

Call us today on 03330 90 60 30 or contact us to speak with one of our experienced advisors.

Can I Remortgage with debt management schemes?

When considering bad credit remortgage deals whilst on a debt management plan, it’s crucial to evaluate whether you meet the necessary qualifying criteria.

Most remortgage deals for bad credit require an LTV (Loan-To-Value) ratio of approximately 80%. If you fall short of this threshold, securing equity release through remortgaging may prove challenging.

Even with substantial equity, perhaps owning half your property outright, lenders will require evidence of your ability to maintain repayments whilst managing your debt management scheme.

Successfully completing a debt management plan typically improves your remortgage prospects, though you may still need to approach specialist adverse credit lenders.

Related reading:

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright; can I remortgage?
• Capital raising mortgages.

Can I Remortgage with Repossessions?

Previous property repossession needn’t permanently prevent future remortgaging opportunities.

The key lies in approaching specialist adverse credit lenders and demonstrating your ability to meet their deposit and affordability requirements.

Can I Remortgage with Bankruptcy?

Bankruptcy represents one of the most significant credit challenges from a lender’s perspective.

Fortunately, various mainstream and specialist lenders now offer remortgage solutions for individuals with historical bankruptcy records.

For comprehensive guidance regarding bankruptcy remortgages, please contact our team to explore your available options.

Can I Remortgage with Payday Loans?

Payday loans, characterised by their high interest rates, rarely contribute positively to your credit profile, and mortgage lenders generally view them unfavourably.

These loans appear distinctly on credit reports, allowing lenders to identify your historical usage of such facilities.

Generally, lenders interpret payday loan usage as an indicator of financial management difficulties, significantly impacting your creditworthiness and potentially limiting your options to specialist adverse credit lenders.

Remortgage rates if I have bad credit.

If you have a poor credit score, you’ll typically find that remortgage deals bad credit come with higher interest rates compared to standard offerings.

The impact on your interest rate largely depends on the timeframe of adverse credit events. For instance, if you had a late payment or missed a bill several years ago, this may have minimal effect on the interest rates available to you.

However, recent significant credit issues like CCJs or property repossession are likely to substantially influence the best remortgage deals with bad credit that lenders will offer.

Outstanding debts, particularly CCJs or IVAs, typically reduce the number of available bad credit remortgage deals and inevitably affect the interest rates you’re offered.

The longer the time elapsed since your credit difficulties, coupled with evidence of your commitment to improving your credit score, the better your chances of securing remortgage deals for bad credit at competitive rates.

Generally, it takes between 6 to 12 months for your credit profile to recover, as this is when negative markers begin to be removed from your credit history.

Given the dynamic nature of the mortgage market, lending criteria are continuously evolving.

Consequently, we cannot provide a fixed list of remortgage options on this page.

For those with significant credit issues, approaching specialist lenders who focus on providing remortgage deals bad credit is often the most practical solution.

Usually, working with a specialist mortgage broker or advisor will help you access the most suitable guidance and options.

Here at Mortgageable, we maintain relationships with numerous lenders and can direct you towards the best remortgage deals with bad credit, regardless of your credit history.

We invite you to contact us today for an obligation-free discussion about your circumstances.

It’s essential to understand the costs associated with remortgaging, particularly when seeking bad credit remortgage deals, as these typically involve higher interest rates.

Tips to get the best bad credit remortgage rates

If you’re looking to remortgage with adverse credit, consider these crucial factors to enhance your chances of securing remortgage deals for bad credit with favourable terms:

Avoid the banks

It’s crucial to understand that within the competitive mortgage market, bank advisors are incentivised to secure customer commitments swiftly.

Consequently, they routinely perform credit checks on willing applicants.

While this approach works well for those with pristine credit histories, it’s potentially problematic if you’re seeking competitive remortgage deals bad credit.

Submitting to a credit check with a lender unlikely to approve your application is not only time-consuming but could potentially worsen your already compromised credit report.

Your optimal approach is to collaborate with a comprehensive market broker who specialises in securing best remortgage deals with bad credit and has extensive experience helping clients with challenging credit histories.

Get your credit report

Understanding your current credit situation is crucial when seeking remortgage deals bad credit. It’s vital to identify any adverse events affecting your creditworthiness and develop strategies to address them.

Leading credit reference agencies like Experian, Check My File, and UK Credit Ratings offer comprehensive credit check services.

These agencies compile slightly different information sets, helping you understand potential reasons for previous lending rejections and identify areas for improvement when seeking bad credit remortgage deals.

Importantly, checking your credit score through these agencies is completely free and won’t negatively impact your credit rating or result in any penalties.

Calculate your LTV

Understanding your loan-to-value (LTV) ratio involves assessing your property’s current value against your existing equity or deposit.

Your LTV plays a crucial role in securing remortgage deals for bad credit, as lenders use this metric to evaluate applications and determine suitable offerings.

Generally, applicants with higher LTVs need stronger credit profiles compared to those with lower LTVs, as larger deposits and equity positions represent reduced risk for lenders.

Improve your credit score

One effective method to enhance your credit rating is utilising a credit-building card specifically designed for those with adverse credit histories.

Regular use and consistent monthly repayments demonstrate responsible borrowing habits, gradually improving your creditworthiness and increasing access to better remortgage deals bad credit.

CashPlus is a widely recognised credit-building card suitable for individuals working to improve their credit standing.

Should I improve my credit score if I have a poor credit history?

When seeking to remortgage with adverse credit, you may encounter challenges during the application process, particularly with traditional high-street banks that don’t specialise in best remortgage deals with bad credit.

However, many borrowers find that taking proactive steps to improve their credit standing yields positive results.

Key improvement strategies include addressing incorrect credit report entries, settling outstanding debts, maintaining current payment obligations, and potentially using a credit-building card to demonstrate consistent repayment behaviour.

While these improvements might not satisfy traditional lenders’ strict criteria, especially if you fall short of their specific requirements, they can significantly enhance your options.

Specialist lenders offering bad credit remortgage deals present an excellent alternative, as they’re experienced in handling adverse credit situations. These lenders may offer more competitive interest rates if you demonstrate commitment to credit repair and financial responsibility.

These specialist providers understand that financial circumstances can fluctuate and typically place greater emphasis on your current and recent financial behaviour rather than historical issues. Their expertise in remortgage deals for bad credit makes them particularly suitable for borrowers working to rebuild their credit profile.

Can I afford to remortgage?

When exploring remortgage deals bad credit, every application undergoes a thorough affordability assessment, regardless of your current financial position.

Lenders evaluate your income against expenditure to calculate your debt-to-income ratio, a crucial factor in determining eligibility for best remortgage deals with bad credit.

Following the Financial Conduct Authority’s 2014 guidelines, your debt-to-income ratio shouldn’t exceed 45% of the total remortgage amount offered.

To estimate your remortgage affordability, follow these straightforward steps:

• Calculate your monthly income by dividing your annual earnings by 12.
• List all monthly expenditures, including bills and existing financial commitments.
• Calculate your debt-to-income ratio by dividing monthly expenses by monthly income and multiplying by 100.

A lower ratio generally indicates better affordability. You can improve this ratio by reducing expenses or increasing income.

What should I do if I want to remortgage with bad credit?

When seeking bad credit remortgage deals, consulting with a specialist advisor is highly recommended.

Our experienced brokers can evaluate your circumstances and identify suitable lenders offering remortgage deals for bad credit.

This approach not only safeguards your credit rating but also significantly reduces time spent searching for appropriate options.

Remortgage with Bad/Poor Credit UK Conclusion

Key points:

• Securing a remortgage despite adverse credit history remains achievable.
• Specialist brokers with bad credit expertise can provide valuable guidance.
• Understanding your credit report helps identify potential obstacles.
• Focus on lenders specialising in adverse credit situations.

If you need assistance with remortgaging despite credit challenges, our team is here to help.

We’ll comprehensively search more than 90 lenders to identify the most suitable remortgage deals bad credit for your specific circumstances.

 

 

 

 

Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.