Before You Remortgage: Fees, Traps and When It Does Not Pay

What remortgaging actually involves

Remortgaging means switching your mortgage to a new deal, either with your existing lender or a new one. Unlike a product transfer with your existing lender, a full remortgage involves a new affordability assessment, a new credit check and typically a new valuation of your property. The process takes four to eight weeks on average.

A product transfer with your existing lender is faster and involves less paperwork but limits you to that lender's available rates, which may not be competitive. Comparing both options is essential before committing.

The risks most people do not check before remortgaging

Early repayment charges can eliminate the saving. Most fixed-rate mortgages carry ERCs of between one and five percent of the outstanding balance during the fixed period. On a £250,000 mortgage, a two percent ERC is £5,000. If the monthly saving on the new rate is £100, that is over four years to break even. Always calculate net saving after ERC before proceeding.

Arrangement fees are frequently added to the loan. A £999 arrangement fee added to a £200,000 mortgage at three percent over 20 years costs approximately £1,540 in total. Fee-free mortgages at a slightly higher rate are sometimes cheaper overall. Compare the total cost of credit, not just the headline rate.

Affordability criteria change. If your income has fallen, your outgoings have increased, or your credit profile has changed since your original mortgage, you may not pass the affordability assessment for the rate you want. Lenders apply stress test calculations that can restrict borrowing even where monthly payments are affordable at the new rate.

Loan-to-value thresholds affect available rates. The best rates are typically available at 60 percent LTV or below. If your property value has fallen or you have not paid down significant capital, you may find yourself in a higher LTV band than expected, with access only to higher rates.

Timing gaps cost money. Borrowers who miss their fixed rate end date roll onto the lender's standard variable rate, which is typically two to three percentage points above the best available fixed rates. Starting the remortgage process six weeks before the deal ends avoids this.

What the small print usually says

Mortgage offers are typically valid for three to six months. If your remortgage does not complete within the offer validity period, you may need to reapply at current rates, which may have changed. Offers can be extended in some circumstances but this is at the lender's discretion.

Portability clauses in your current mortgage allow you to take the existing deal to a new property if you move. Remortgaging before moving can forfeit this option and trigger an ERC. If a move is planned within the ERC period, check portability terms before initiating a remortgage.

Who remortgaging works for and who it does not

Remortgaging makes financial sense for borrowers whose fixed deal is ending or has ended, where the new rate after fees produces a net saving over the remaining mortgage term, and where the property value supports the required LTV band.

Remortgaging is less suitable for borrowers within an ERC period where charges outweigh savings, those with significantly changed income or credit profiles since the original mortgage, and borrowers with very small remaining balances where arrangement fees represent a disproportionate cost.

What to verify before you proceed

Confirm in writing with your current lender: the ERC amount and the date it expires, whether a product transfer is available and at what rate, and the outstanding balance and current LTV. Compare at least three lenders using a whole-of-market broker or direct comparison, including total cost of credit over the remaining term, not just monthly payment.

Where to complain if something goes wrong

If a lender or broker misrepresents terms, fails to disclose fees, or provides unsuitable advice, the escalation path is a formal written complaint followed by the Financial Ombudsman Service if unresolved within eight weeks. Mortgage brokers must be FCA-authorised; verify on the FCA register before engaging.

Frequently asked questions

When is the best time to start a remortgage?

Six weeks before your current deal ends is the recommended start point. This allows enough time for the application, valuation and legal process to complete before you roll onto the standard variable rate.

Can I remortgage if I am in negative equity?

Remortgaging in negative equity is very difficult as most lenders require a minimum LTV of 95 percent. Government schemes have previously supported negative equity remortgaging but availability changes. Speak to your existing lender about a product transfer as an alternative.

Do I need a solicitor to remortgage?

A full remortgage to a new lender requires legal work to transfer the charge. Many lenders offer a free basic legal service for standard remortgages. A product transfer with your existing lender requires no legal work.

Will remortgaging affect my credit score?

A full mortgage application involves a hard credit search which is recorded on your credit file. Multiple hard searches in a short period can affect your credit score. Rate shopping searches from comparison sites are typically soft searches and do not affect your score.

What is a product transfer and how does it differ from a remortgage?

A product transfer switches you to a new rate with your existing lender without a full application process. It is faster and requires no valuation or legal work but limits you to that lender's products. A remortgage opens the whole market but involves more process and cost.