Remortgage

Remortgaging is a term used mainly in the United Kingdom. In the United States and elsewhere, the same process is usually called refinancing.

Homeowners remortgage for several reasons: to get a lower interest rate, especially when a fixed-rate deal ends and the mortgage would otherwise move to the lender’s more expensive standard variable rate; to borrow more against their home for home improvements or other purposes; to change the type or length of their mortgage; or to remove someone from the mortgage.

For example, a homeowner whose two-year fixed rate is ending might remortgage to a new five-year fixed rate with another lender, avoiding a jump in their monthly payments.

Remortgaging can involve costs, including arrangement fees, valuation fees, legal fees and possibly early repayment charges if leaving a deal early. Borrowers need to compare these costs with the savings. In the UK, many homeowners remortgage every few years when their fixed-rate deals end. Taking on extra borrowing increases the total debt secured against the home.