A remortgage is the process of replacing an existing mortgage with a new one on the same property, either with the current lender or a different one. It is commonly used to secure a new rate when an initial deal ends or to release equity.
In one line: A remortgage swaps an existing mortgage for a new deal on the same property, often to get a better rate.
How a remortgage works
Remortgaging typically happens as a fixed or tracker deal ends and the balance would otherwise revert to the standard variable rate. The new lender reassesses affordability, income and the property valuation.
On a 180,000 GBP balance moving from a 7% standard variable rate to a 4.5% fixed rate, monthly interest falls sharply, saving roughly 4,500 GBP of interest over the first year before fees.
Releasing equity through a remortgage increases the loan, for example borrowing an extra 20,000 GBP against a home that has risen in value.
A remortgage vs porting
A remortgage replaces the deal, usually on the same property, and can switch lenders. Porting keeps the existing deal but moves it to a different property when relocating.
Remortgaging during a fixed term can trigger an early repayment charge on the old deal.
Primary source: FCA: Mortgages and home finance