Remortgage Guide: How to Lower Your Mortgage Payments and Save Money
Thinking about paying less each month on your mortgage? A remortgage might be the answer. It simply means switching your existing loan to a new deal, either with your current lender or another one. If you lock in a lower rate or change the length of your loan, you could see a noticeable drop in your monthly outgo.
Most people only think about a remortgage when interest rates fall or their personal situation changes. But you don’t need to wait for a big market shift. Even a small rate drop can add up over time, especially on a large loan.
When is the Right Time to Remortgage?
Look at your current rate. If it’s higher than the average market rate by more than 0.5 %, it’s worth checking other offers. Also, consider how much you’ve paid off already. If you’ve built up equity, you might get better terms.
Other red flags include a high early‑repayment charge, a changing personal circumstance (like a new job or a bigger family), or if you want to release some equity for home improvements. Just keep an eye on the total cost, not just the advertised rate.
Step‑by‑Step: The Remortgage Process
1. Check your mortgage details. Find out your remaining balance, current rate, and any exit fees. Your lender should have a statement you can request.
2. Shop around. Use comparison sites or talk to a broker. Get at least three quotes and note the APR, any fees, and the length of the deal.
3. Calculate the true cost. Add up arrangement fees, valuation fees, legal fees, and any early‑repayment charges. Subtract those from the monthly savings you expect.
4. Apply for the new mortgage. You’ll need proof of income, bank statements, and details of your existing loan. The lender will run a credit check; this is normal and won’t hurt your score if it’s a single inquiry.
5. Legal work. A solicitor or conveyancer will handle the transfer. They’ll make sure the old mortgage is paid off and the new one is registered.
6. Move in. Once the paperwork is complete, your new lender takes over the loan, and you start paying the new rate.
Remember that remortgaging isn’t free. If the saving you’ll get each month is less than the total fees divided by the remaining term, you might not come out ahead. A quick spreadsheet can help you see the break‑even point.
Also, keep an eye on the loan‑to‑value (LTV) ratio. Lenders often give the best rates to borrowers with an LTV of 80 % or lower. If you’ve paid down a lot, you could qualify for a better deal.
Finally, think about flexibility. Some deals let you over‑pay without penalty, which can shave years off your loan. Others lock you in for a fixed period but charge a fee if you want to switch early.
Remortgaging can be a powerful tool to lower payments, free up cash, or shorten your mortgage term. By checking rates, comparing costs, and running the numbers, you can make a decision that truly saves you money. Start by pulling your current mortgage statement and see if the numbers add up – you might be surprised at how much you could keep in your pocket each month.
