What are 'remortgages'?
To remortgage a property is to change the mortgage on your existing property. Remortgages are available in both fixed-rate and tracker options.
Fixed-rate remortgages are where you make your repayments at a guaranteed rate for a set period of time during the life of your remortgage (read more about fixed-rate mortgages here).
Tracker remortgages can fluctuate according to changes in the Bank of England’s base rate or to the lender’s Standard Variable Rate. This means that payments could rise or fall during the lifetime of the mortgage (read more about tracker mortgages here).
Why might you decide to remortgage?
As the tables on Which4U show, mortgages at a lower loan-to-value tend to carry the best rates. This is because savers who have accrued a larger deposit or more equity in their property are considered lower risk by lenders.
So, after years of repayments, homeowners might consider negotiating a better rate by remortgaging their home to reflect their lower value (and reduced risk) on their mortgage loan. It also allows homeowners to reconsider between a fixed-rate or tracker rate mortgage to reflect their preferences.
What to note with remortgages:
The right deal on a remortgage could save hundreds of pounds per month. But it is important to watch for high arrangement fees, even if you're not moving home. Mortgage 'arrangement' fees have risen drastically in 2012 and 2013, even as the Funding for Lending Scheme has driven down initial mortgage rates to record low levels.
Do you meet the criteria for the loan? If, at the point of remortgage, the amount of your mortgage left to pay is still at 80% or 90%, you will be restricted to products that reflect your loan-to-value. Some offers may also require you to become a full banking customer with the lender.
The best way to compare remortgages is to identify the loan-to-value that you qualify for, and then to compare the interest rates on offer alongside the associated fees.
As always, we recommend that you seek professional advice if you are unsure which type of mortgage is right for you and that all of the information provided above is for use as an overview only and should not be the basis for your mortgage decision.