By Mark Dickety on

Expert Guides

The advantages and disadvantages of remortgaging

Remortgaging, also known as refinancing, involves switching your current mortgage to a new one, often with a different lender.

Remortgaging your home can make good financial sense if you’re a homeowner and want to take advantage of a better deal. However, there are a number of advantages and disadvantages that you should be aware of before you start a remortgage application.

Here are the key advantages and disadvantages of remortgaging:

The advantages of remortgaging:

  • Lower interest rate. You can borrow at a lower interest rate than your current mortgage deal, saving you money on your monthly repayment.
  • Cost saving. By obtaining a lower interest rate, remortgaging can save you money over the long term. Reduced monthly payments can free up cash for other expenses or savings.
  • Equity Release. You can use some of the equity in your home to release funds – great for doing that renovation you’ve always dreamed of, or using the cash for something else.
  • Debt consolidation. You can consolidate your debts such as personal loans or credit cards, into one affordable payment and reduce your monthly outgoings.
  • Flexibility: You can move to a new mortgage product that suits your changing financial circumstances. You can choose between fixed-rate mortgages (offering stability with a fixed interest rate for a certain period) or variable-rate mortgages (where the interest rate can fluctuate). If your circumstances change, you should update your mortgage deal to reflect them.

 The disadvantages of remortgaging:

  • Fees. You may need to pay a fee when you remortgage such as arrangement fees, valuation fees, legal fees, and potentially exit fees from your current lender. That could make your new lower mortgage rate less rewarding so it’s important to carefully consider the costs involved before deciding to remortgage.
  • Early repayment charges. If you’re currently on a fixed-rate mortgage or have an existing deal with an early repayment charge (ERC), you may have to pay a penalty for exiting your current mortgage early. These charges can be substantial, so it’s essential to evaluate whether the potential savings from remortgaging outweigh the early repayment charges.
  • Qualification criteria. Lenders have specific criteria for approving remortgage applications. If your financial circumstances have changed since you obtained your current mortgage, such as a decrease in income or a decline in your credit score, you may face challenges in securing a new mortgage or accessing the best interest rates.
  • Risk considerations. You’ll be using your home as security for your remortgage, which means it could be repossessed if you don’t keep up with your mortgage repayments.
  • Cost. If you’re taking your remortgage over a longer term than your existing mortgage, the total cost you repay will increase.

If you’re interested in remortgaging your home and would like to know if you’re eligible, please talk to our team of expert mortgage advisers and we’ll talk you through your options. Call us on 08454 500200 or email make an enquiry.

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is £595.

Mark Dickety
Mark is an experienced Mortgage and Protection Adviser who has been providing mortgage advice since 2010. He thrives on finding the right solution for each of his clients' requirements ensuring they have the best experience possible.
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