Remortgaging is the process of changing your mortgage product, either with the same lender or moving it to another one. Essentially, it means that you choose a different deal than the one you initially got when you bought your home. Your new mortgage will replace the old one and have new terms. These are likely to include:
- A different interest rate
- New monthly repayments
- A different length for the initial period
- Repayment or interest-only
The amount you pay is transferred to another mortgage policy, effectively starting a brand new mortgage deal. When you move onto a new mortgage deal, the money borrowed pays off the old one.
Most people remortgage when their current initial rate is about to expire. By remortgaging, you can avoid moving onto the lender’s standard variable rate (SVR), which typically has much higher payments than the initial rate.