Whether you want to secure a cheaper interest rate, release equity for home improvements, or move away from your lender's Standard Variable Rate (SVR) when your current mortgage deal ends, there are many reasons to consider remortgaging. However, the timing of when you remortgage (and how often) is important to getting the most out of a new deal, saving money and maintaining balance in your personal financial circumstances.

Most homeowners remortgage every two to five years to align with the end of a fixed-rate mortgage term. While there is no legal limit on the number of times you can switch mortgage deals, and you are free to remortgage as many times as you wish, frequent switching without a strategic plan often leads to unnecessary costs. Switching may trigger early repayment charges (ERCs) if not timed correctly, and lenders may be concerned about reliability and take this into account before offering you a mortgage if you consistently move between different products.

Here, the experienced remortgage solicitors at JMW explain how the timing of your remortgage can affect your mortgage payments and why it may not make financial sense even if you can secure a better mortgage deal as a result. We also outline the best practices to make the best of a remortgage and prevent any financial difficulties from arising.

When Can You Start Looking for a New Mortgage Deal?

Most lenders require you to be the registered owner of a property for at least six months before they accept a remortgage application. This 'six-month rule' prevents "back-to-back" lending without a proven history of ownership and property value stability. While specialist lenders occasionally waive this requirement for specific personal circumstances, six months remains the market standard.

You can start exploring remortgage options approximately six months before your current deal ends, as mortgage offers will often last for six months. Starting early means you can lock in a new rate and time completion (the switch from your existing mortgage deal to the new one) for a point before your fixed or tracker rate elapses and you move to your lender's SVR.

When Is the Best Time to Remortgage?

The remortgage process typically takes four to eight weeks to complete. The optimal time to remortgage is when your current deal approaches its expiry date, but before your monthly payments increase due to the SVR. While it is technically possible to remortgage early, additional charges will apply that can outweigh any savings you would otherwise make. ERCs are a penalty for breaking your mortgage contract before the agreed date, and are typically a percentage of the outstanding loan balance, often ranging from 2 per cent to 5 per cent. Speak to a mortgage broker or adviser about the possible impact of if you wish to remortgage while a fixed term is ongoing.

Times when remortgaging may be the best way to improve your financial position include:

When your fixed-rate deal ends

If you are on a fixed-rate deal, your interest rate is locked for a specific period. When this concludes, your lender automatically moves you to their SVR. This rate is often significantly higher than those available on new deals, which can lead to much higher monthly repayments. Remortgaging before this happens is the best way to save money, because it not only avoids the SVR but will often enable you to secure a better deal overall.

When interest rates fall

If market interest rates drop during your term, a better deal may be available elsewhere. Even mid-way through a fixed rate, the savings from a cheaper interest rate might outweigh the ERC required to leave your existing deal. You should carefully calculate whether the financial benefits of a lower rate justify the exit fees of your current mortgage before making any decisions.

When property value increases

If your property value increases, your Loan to Value (LTV) ratio improves. A lower LTV ratio unlocks access to favourable mortgage terms and lower interest rates. When you hit a new LTV threshold, the available mortgage rates become more competitive, and this could offer an incentive to switch.

When you need to release equity

Remortgaging early may be justified if you wish to release equity from your home. This works by increasing your mortgage debt and providing the difference as a lump sum of cash. The funds can pay for home improvements, debt consolidation, or other significant outgoings without resorting to high-interest personal loans.

How Should You Evaluate Remortgage Options?

When you remortgage, you generally choose between a product transfer or a full remortgage with a new lender. A product transfer involves staying with your current lender but moving to a new deal. This is faster than moving to a new lender as it often bypasses a new valuation and some of the legal work. However, always check if the current lender is offering the best rate available on the wider market, because switching will often deliver a better deal.

A new lender treats the move as a new application, and will require a credit report check and an assessment of your financial circumstances. You will need a solicitor to carry out the legal work on behalf of both you and your new lender. At the same time, this often delivers significant savings compared with staying with the same lender.