Debt consolidation has also become a primary reason to remortgage. This involves releasing equity from you property to pay off other debts such as secured loans, personal loans and credit cards, which may be attracting a higher rate of interest than could be found through a Mortgage. This could help reduce your monthly outgoings.

Remortgaging to pay for significant new purchases such as Cars, Conservatories, Home Improvements, etc, may also provide financial benefits when compared with Hire Purchase or Personal Loans. This can allow you to make use of the rises in the property prices of the past 5 years or so to utilise your increase equity.

Increased competition in the mortgage market means NEW customers are often offered a lower rates than the lender's existing borrowers pay (depending on the individual lenders criteria). This suggests that the loyal customer pays for the reduced rates of new customers.

Remortgaging is a lot easier than you might think: particularly as lenders often pay most or all your legal and other costs, and our dedicated case managers are there to help you through the process.

To find out more, choose from the menu below (or click on the first and just read on if you’d like to review all aspects)

Fixed versus Variable rate mortgages
Why Loyal Customers Suffer
Who can benefit from Remortgaging
Who should not Remortgage

Fixed versus Variable rate mortgages

If you have a variable rate mortgage, one option to consider when remortgaging is to swap your current variable rate loan for a fixed-rate one, particularly if your new loan is going to be quite a stretch (if you increase the size of the loan). Many borrowers hesitate to do this because they fear they will end up setting their interest rate in stone just as base rates reach one of their cyclical highs.

In fact, the link between the interest on a fixed-rate mortgage and changes in base rate is an indirect one at best. Lenders generally look some way into the future when setting their rate for a fixed-rate loan, and so make every effort to account for expected base rate changes well in advance.

Fixed rate loans are linked much more closely to money market rates, and these do not always follow base rate.

Fixed rates are not your only choice when remortgaging. Other mortgage deals, such as discounted loans or base rate trackers, allow your own interest rate to continue moving up and down with base rate changes, but can still save you money. In today's mortgage market, discounted or Tracker rates can give borrowers the biggest immediate savings (as you are taking on the risk of interest rate increases), but fixed-rate deals offer greater peace of mind.

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Why Loyal Customers Suffer

Lenders compete fiercely with one another for your business, which makes UK home loans very much a “buyer's” market. Some lenders go so far as to offer "loss leader" rates lower than those the company itself must pay to borrow. They do this because they know that, once tempted in by the very low initial rate, many borrowers will stay put long after the Initial rate period has ended. When the fixed rate or discounted period expires, the interest rate switches to the lender's standard variable rate (or a fixed amount above base rate for tracker products)- which may be far from competitive – and they can start to extract a profit from your business.

The gap between new customers' rates and those offered to long-standing customers can reach 1.5% or even more. Existing customers are then faced with the choice of either seeing their own rate fall further and further behind those new recruits are offered, or upping sticks to a rival lender themselves (although in some cases your existing lender will match a deal offered by a rival if pressed!)

Off course, we will always tell you to get details of what your existing lender will offer for comparison to the rates other lenders can offer you. Costs should also be taken into account, as a better rate with legal fees and lender fees doesn't always make financial sense if your existing lender will allow you to change for what is usually a nominal administration fee.

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Who can benefit from Remortgaging

Mortgage pundits agree that there are great opportunities for many homeowners to save money by remortgaging.

Almost anyone with a variable rate mortgage of more than £30,000 to £40,000 and no redemption penalties should be able to win a better deal (depending on status and circumstances). People with redemption penalties on larger mortgages may still find it attractive to move, it will depend on your current rate, the new rate we can secure for you and the size of the penalty. Our consultants will provide all information you require to guide you on this, looking primarily at cost of staying where you are versus the cost of moving to a new lender.

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Who should not Remortgage

Many borrowers stand a good chance of saving money through remortgaging. But there remain some cases where remortgaging is not a realistic option.

Early Redemption Penalties

If you have recently taken out a fixed-rate or discounted loan, you may find that early redemption penalties make it very expensive for you to take your loan elsewhere in its first few years. These penalties can stay in force long after the original fixed-rate or discount has run out. Our consultants will make sure your own loan does not make changing lenders prohibitively expensive before you remortgage.

Very Small Loans

Many lenders accept remortgage business only if the loan required is above a minimum level of about £25,000. Fees may also be a problem with very small remortgage loans, as these may outweigh the small saving on offer.

Change of Employment Status

Lenders need to feel sure you will be able to repay the loan you take on, so they need to know your likely future income. If you have recently changed your work status from employee to self-employed, but have not yet had time to build up a reasonable track record for your business, you may find it difficult to get a good remortgage deal – again our consultants should help you determine whether this is the case.

Attractive offer from existing lender

Many lenders as discussed previously will offer an attractive rate to existing borrowers, with lower costs associated with this. This can mean that changing lender for rate reductions alone are not always financially justifiable.

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