Remortgaging explained: when to switch, what it costs and how the legal side works
Handled late or carelessly, it can cost a household hundreds of pounds in avoidable interest before anything has even been signed.
We act on remortgages every week for clients across Norfolk and throughout England and Wales. What follows is the practical advice we find ourselves giving most often.
First, know which of the two routes you are taking
There are two ways to change your mortgage, and they are not the same thing.
A product transfer, sometimes called a rate switch, means staying with your existing lender and moving onto one of their new deals. There is usually no legal work involved and it can be arranged quickly, often online. The limitation is obvious. You are choosing from one lender's shelf.
A remortgage means moving to a different lender. Because that lender is taking a charge over your home, a short legal process is required. It is a fraction of the work involved in buying a house, but it is proper legal work and it needs doing properly.
The mistake we see is treating the product transfer as the default because it is easy. Easy is not the same as cheapest. Compare both routes before you decide. If the product transfer wins, take it with confidence. If it does not, the few weeks of legal work will usually pay for themselves many times over.
Practical tip: Many lenders allow you to reserve a new rate up to around six months before your current deal ends. Booking early costs nothing in most cases and you can usually switch to a better product if rates improve before completion. Starting early is the single most effective thing you can do.
The date that matters most is not the one on the letter
Two dates govern a remortgage. The date your current deal ends, and the date your early repayment charge falls away. They are often the same. They are not always the same.
If you leave a fixed or discounted deal before the tied in period expires, the early repayment charge is usually the largest single cost in the whole exercise and it can wipe out the benefit of switching entirely. Check your original mortgage offer or ask your lender to confirm the exact date. Then work backwards and aim to complete on the first day you are free to leave, or the day after your current deal ends, so that you never spend a single month on the lender's standard variable rate.
That standard variable rate is where the real damage is done. It is often several percentage points higher than the deal you have just come off, and a household that drifts onto it for two or three months while they get organised can lose more than the entire cost of the remortgage.
Do the arithmetic before you fall for the headline rate
The lowest advertised rate is not reliably the cheapest deal. Fees distort the picture, and they distort it most on smaller balances.
To compare properly:
- Take the interest you would pay over the deal period and add the product or arrangement fee. Compare that combined figure, not the monthly payment.
- Compare like with like. A two year fixed rate against another two year fixed rate, not against a five year product.
- Look at the annual percentage rate of charge, which reflects fees as well as interest.
- Think about flexibility. Can you overpay? Can you take the mortgage with you if you move? Those features have real value if your circumstances might change.
- Note the early repayment charges on the new deal, because they determine how easily you can switch again.
Worth knowing: A slightly higher rate with no arrangement fee frequently beats a very low rate carrying a large fee, particularly where the outstanding balance is modest. Always run the total cost both ways rather than assuming the lowest number wins.
If a fee can be added to the loan, remember that you will pay interest on it for the rest of the term unless you clear it separately. Adding a fee is a convenience, not a saving.
Small moves in the weeks beforehand can change the rate you are offered
Lenders price by loan to value band. If your outstanding balance sits just above a band threshold, a relatively modest overpayment or a slightly better valuation can move you into a cheaper bracket. It is worth calculating where you sit before you apply, because the difference between bands can be significant.
In the months before you apply, it also helps to:
- Avoid taking on new credit, changing jobs or moving money around unusually. Affordability assessments are stricter than many borrowers expect.
- Check your credit file for errors and settle any small forgotten balances.
- Make sure you are on the electoral roll at your current address.
- Gather your paperwork early. Recent payslips, bank statements, identification documents and, if you are self employed, accounts or tax calculations.
What the legal work actually involves
Where you move to a new lender, we handle the legal process from start to finish. Most remortgages complete within a few weeks. In outline, we open your file and carry out identity and anti money laundering checks, obtain the legal title to the property, and request a redemption statement from your existing lender so that we know precisely what is owed. We review the new mortgage offer and satisfy the conditions the lender has set, carry out the necessary checks, and arrange for you to sign the new mortgage deed. On the completion date the new lender releases the funds, we repay your old mortgage and send you any surplus if you are raising capital. We then register the new mortgage at HM Land Registry and make sure the old lender's charge is removed from the title.
Two points are worth drawing out. First, some lenders will accept search indemnity insurance instead of full searches, which can save both time and money. Second, the registration work at the end genuinely matters. A charge left on the title years after it was repaid is a problem that surfaces at the worst possible moment, usually when you come to sell.
Where remortgages actually get delayed
In our experience, the hold ups are rarely legal. They are almost always practical, and almost always avoidable:
- Identity verification left until late. We can start this the moment you instruct us. Doing it early removes a common bottleneck.
- Anyone living in the property who is over seventeen and not on the mortgage. The lender will usually require them to sign a consent form. Identifying them at the outset avoids a scramble at the end.
- Name changes. If you have married or changed your name since you bought, the title and your identification documents may not match. This is simple to resolve when we know about it early.
- Leasehold property. A new lender may want additional information about the lease, and management companies are not always quick to respond. We request this as soon as possible.
- Adding or removing a borrower. That is a transfer of equity rather than a straightforward remortgage. It can be dealt with alongside the remortgage, but it changes the work involved and needs to be flagged at the start.
- Missing redemption figures. Where there is a second charge, a loan secured on the property or a help to buy equity loan, each one has to be dealt with. Tell us at the outset.
A word of caution: Remortgage completions involve funds moving between the lender, your solicitor and, if you are raising capital, your own bank account. Criminals target exactly this moment. We will never email you to tell you that our bank details have changed. If you receive anything suggesting otherwise, stop and telephone us on a number you already have.
The free legal service question
Many lenders offer free standard legal work as part of the deal, or a cash contribution towards it. The free service is usually delivered by a large volume provider appointed by the lender, and you do not choose the firm. Some clients are perfectly content with that. Others find that a matter handled at volume takes longer and is harder to chase when something needs a human decision.
You are generally entitled to take the cash contribution instead and instruct a firm of your own choosing. Before you decide, ask the lender which option is available on your particular product. If you would prefer to deal with named people who answer the telephone, that choice is often available and costs less than most borrowers assume.
When it may not be worth switching at all
Honest advice includes knowing when to do nothing. A remortgage is unlikely to be worthwhile where you are still deep inside a fixed period and would face a substantial early repayment charge, where your outstanding balance is small enough that the fees swallow the saving, or where your circumstances have changed in a way that will make a new lender's affordability assessment difficult. In that last case, a product transfer with your existing lender is often the more realistic route, because it usually involves lighter underwriting.
Talk to us
Every situation is different, and the arithmetic is personal to your balance, your equity and how long you intend to stay. If you would like to talk it through or receive a clear fixed fee quote with no obligation, our team will be glad to help. We work in teams rather than leaving your file with a single case handler, which means someone who knows your matter is always available to speak to you.
Telephone 01603 877066 or 01603 877067
Email onboarding@mjpconveyancing.com
WhatsApp 07849909710
Office 69 to 75 Thorpe Road, Norwich, Norfolk, NR1 1UA Opening hours Monday to Friday, 9.00 am to 5.00 pm, closed 1.00 pm to 2.00 pm
This article is general information about the law in England and Wales and is correct to the best of our knowledge at the time of writing. It is not legal, tax or financial advice and should not be relied upon as such. We are not authorised to give mortgage or financial advice, and you should speak to a qualified mortgage adviser about which product suits you.
MJP Conveyancing Ltd is authorised and regulated by the Solicitors Regulation Authority (SRA No. 590889). Registered in England and Wales No. 8026741. VAT No. 157917571.
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