close menu

Remortgage, anyone?

by Marlon Borez | Sep 27, 2017
  • With interest rates at record lows in the UK and the Bank of England warning last week that rates will rise sooner than markets predict, now could be a great time to remortgage. This could enable you to secure a low rate and guarantee repayment certainty for the foreseeable future.

    How does it work when you remortgage?

    Remortgaging is when you look to move from one mortgage deal to another, either with the same lender or by moving to a new one. A mortgage is likely to be your largest financial commitment lasting most of your working life, but you don’t necessarily have to stay on the same deal. Just as you would shop around for the best broadband and mobile phone tariffs, the same should apply to your mortgage.

    There are many reasons why you might want to remortgage your home in the UK. Let’s take a look at three scenarios.

    Your current introductory deal is coming to an end

    Initially, when you take a mortgage out, you will get an introductory rate for normally two, three or five years. When this introductory period ends, you automatically revert to a lender’s standard variable rate, which could be at a much higher interest rate. Once you move out of this introductory rate period, it could be the perfect time to remortgage.

    You want to secure a better rate

    You may want to move to a lender that has a much lower interest rate, but your current lender may require you to pay an early repayment charge before you can switch. You need to tread carefully in this scenario, as the cost saving of moving onto a lower rate needs to be weighed up against the exit penalty charged by your current lender.

    As UK mortgage experts, we have done detailed analyses for clients in this scenario and have often found that breaking your current deal, paying the penalty and moving onto a lower rate works out to be the most cost-effective option. Whether this works or not depends mainly on the exit penalty charged by your current lender and how long you have left on your current deal.

    You want to move from interest only to capital repayment

    Generally speaking, your current lender should be able to switch you to capital repayment. If they can’t do this, then it would be a good time to look to remortgage to another lender.

    Why now could be the best time to remortgage

    You may be surprised by the savings to be made by remortgaging. If you took your mortgage out on a two-year fixed rate in 2015 when rates were roughly 1.4%, you’re looking to reduce that to as low as 1.15% if you remortgage now.

    The reduction in rates is even more pronounced if you’re about to come out of a five-year fixed deal. Clients who took their mortgage out in 2012 when average rates on a 75% LTV product was 4.2% would now be looking at rates of about 1.8%. That’s a massive saving, and on a typical £250,000 mortgage this results in an annual saving of £3,800.

    The greatest saving to be had is if your fixed rate has ended and you’re languishing on your current lender’s standard variable rate (SVR). Current SVR’s are typically in the region of 4.4%, and with five-year fixed rates at under 2%, it’s a no brainer to remortgage if you can.

    With spreads between two and five-year fixed rates at about 0.4%, it doesn’t take much of a rate hike to negate the savings in taking a two-year deal. We’re seeing more and more clients looking for  greater certainty in future payments and peace of mind and are choosing longer term five-year deals.

    Ask our experts if remortgaging is for you

    Send us an emailLeave a comment below

    What you need to consider before remortgaging

    Here are three pieces of advice I’d give to anyone thinking about remortgaging:

    1. Check if the new lender is offering a fee-free mortgage and if there is a product fee applicable when taking out the new mortgage. If so, these fees should be taken into account when weighing up the benefits of switching lenders.
    2. There may be an early repayment charge payable on your current mortgage before you can switch to a new deal. This could outweigh the benefits of switching.
    3. Make sure you are mortgage ready. A new lender will conduct a full affordability assessment and credit score check so make sure your credit report is clean before applying to remortgage to another lender.

    There’s ongoing uncertainty about the base rate now, but whether it rises sooner or later, one thing’s for certain: Mortgage rates are not going to stay this low indefinitely. This is prompting many who have the option to seek longer fixed term mortgage deals to secure their finances for the future. 

    With rates as low as they are now, increasing uncertainty about our economic future, and lenders willing to lend, now is a good time to remortgage and provide yourself with some financial certainty.

    Contact us today if you have any queries about mortgages or remortgaging. Give us a call on +44 (0) 20 7759 7519, email, or simply leave a comment below.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

    • Hand depositing coin depicting Pound symbol into house-shaped piggy bank
      Should you remortgage or consider a product transfer?
      Sep 23, 2019  |  by Neil Ambrose
    • Town- houses
      How Shari’ah (Islamic) mortgages work
      Sep 06, 2019  |  by Ian Henning
    • Home Model
      4 things first-time homebuyers should do
      Aug 20, 2019  |  by Neil Ambrose
    • Property with price tage
      It’s a great time to buy your first UK property – here’s why
      Jun 03, 2019  |  by Marlon Borez
    • Handing over house keys
      Contractor mortgages: What you need to know for a successful application
      May 31, 2019  |  by Ian Henning
    • House rent protection
      Rental guarantees: What lenders think about rent protection schemes
      Apr 24, 2019  |  by Bill Monty
    • blended-families
      How “yours, mine and ours” complicates the estate planning process: Advice for blended families
      Apr 17, 2019  |  by Sherron Alexander-Bedingfield
    • Mortgage Concept
      The perfect time to secure a better interest rate on your remortgage
      Apr 03, 2019  |  by Ian Henning
    • growing tree
      The boom behind ESG investing – what’s actually driving the demand
      Mar 26, 2019  |  by Mike Abbott
    • Lightbulb working
      South Africa’s Retail Distribution Review – slow but important changes for investors and advisors
      Mar 05, 2019  |  by Mike Abbott

    South Africa

    Cape Town

    Regent Square
    Doncaster Road
    Kenilworth 7708 +27 (0) 21 657 2120


    25 Richefond Circle
    Umhlanga 4320 +27 (0) 31 536 8843

    United Kingdom


    One Croydon
    12-16 Addiscombe Road
    Croydon CR0 0XT +44 (0) 20 7759 7514



    9 Yarra Street
    South Yarra
    VIC 3141 +613 (0) 8651 4500

    Sable International is a trading name of 1st Contact Money Limited (company number 07070528), registered in England and Wales. We are authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (1st Contact Money [PTY] Ltd - FSP no. 41900) and hold an Australian Financial Services Licence issued by ASIC to deal in foreign exchange (1st Contact Group - AFS Licence number 335 126).

    We use cookies to provide the best website experience for you. Using this website means that you agree to this. How we use cookies.