What is a remortgage?

A remortgage is when you switch your mortgage from one product (loan) to another.

People typically remortgage for the following reasons:

• Better interest rate. If the initial deal period on a mortgage ends, homeowners can remortgage to find better interest rates offered by other lenders.
• Release equity. Remortgaging can release equity that you can use for other purposes (e.g., pay off debts or make investments). For example:
  • Your property is now worth £200,000.
  • You initially bought it for £150,000 with a £100,000 mortgage and a £50,000 deposit.
  • Over the years, you paid off £30,000, so you now owe £70,000 (£100,000 – £30,000).
  • You remortgage for £150,000 – you get a loan from a lender, using your home as security. You can pay off the existing £70,000 mortgage via regular payments as usual and have £80,000 in cash to use for other purposes.
• Change mortgage terms. For example, change from interest-only to repayment or change the repayment period