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Do You Need a Deposit to Remortgage?

What does remortgaging a house mean? The equity is the difference between the value of your home and the amount you wish to borrow – so provided you don’t want to borrow more than 90% of the value, you won’t need a deposit.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-06-15
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How much deposit do you need for a remortgage?

The normal answer to do you need a deposit to remortgage is no; you're replacing one mortgage product with another, so you won't usually need to save anything for a further deposit.

What does remortgaging a house mean? The equity is the difference between the value of your home and the amount you wish to borrow – so provided you don’t want to borrow more than 90% of the value, you won’t need a deposit.

When You Remortgage What Happens?

What’s a remortgage used for? Homeowners refinance through a new product or lender to reduce their monthly outgoings, raise equity capital or consolidate debts. When should you remortgage depends on your existing contract terms, but the most valuable time is usually when a fixed-term deal ends.

Can you remortgage to pay off debts? You can, provided you meet the lender’s eligibility terms – if you have equity in your home, you can increase your mortgage balance to pay off other debts, particularly those with a higher interest rate.

Do you have to remortgage at any stage? Not necessarily, although if you remain with the same lender and product, you'll normally switch to the lender's Standard Variable Rate (SVR), which is more expensive than a fixed-rate deal.

What does remortgaging a house mean in terms of equity? The equity is the proportion of your home you own outright, and you can normally remortgage up to around 90% of the property value.

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Based on your yearly income,
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Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.

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Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.

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Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.

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When Should You Remortgage a Property?

You might be considering what’s a remortgage and whether it may be suitable for your needs. Typical examples include raising finance or switching to a more reasonable offer.

Do You Need a Deposit to Remortgage and Save Money?

No, provided you have enough equity, you won't need to pay anything further to remortgage at a better interest rate. Do you have to remortgage to reduce your rate? Yes, lenders won’t normally negotiate an interest rate on a standard product, so remortgaging is the best solution.

When should you remortgage to reduce your costs?

  • A product transfer is one option. What’s a remortgage product transfer? It means you remain with the same lender but switch to a new product.
  • What does remortgaging a house mean with another lender? You take out a new mortgage, pay back your existing loan, and start making repayments to the new provider.

What’s a remortgage LTV cap? The LTV (Loan to Value) is the maximum the lender will offer against your property value – this is normally up to 90%. If your home is worth £300,000, you can borrow up to £270,000.

Do You Have to Remortgage to Borrow More?

Yes, you can remortgage to increase the amount you’re borrowing. What’s a remortgage to borrow more? It's as simple as an initial mortgage application. The lender assesses your income, debts, outgoings and property value to decide whether they can lend the higher value you wish.

Can You Remortgage to Pay Off Debts?

Another option is to remortgage to consolidate debts, such as credit cards or personal loans. What’s a remortgage advantage to consolidating debt? Mortgage interest rates are much lower than short-term financing, although you'll be repaying the debt for longer – which might mean it costs more in the long term.

Should You Remortgage After a Fixed Term?

Remortgaging during a fixed-term contract can be costly because more lenders levy an early settlement or exit fee, calculated as a percentage of the total value. For example, what’s a remortgage exit fee might mean incurring a charge of 5% against the amount you currently owe.

Most people decide to remortgage after a fixed term has ended. Can I remortgage during a fixed term if I would still save money, irrespective of the exit charge? You certainly can, although it’s important to do your calculations carefully.

When Can You Remortgage Your House?

Most remortgages take around four to eight weeks, although you can complete the process faster if there are no complications and you comply with the lender’s eligibility criteria.

What’s a remortgage eligibility criteria? Lenders apply these rules to decide whether they can lend to you, including the maximum LTV they will offer and the upper limit available against your income.

Do you need a deposit to remortgage quickly? Generally, no, deposits are not a normal requirement, but there are other costs and fees to include in your calculations, including:

  • The lender levies arrangement fees to set up the remortgage.
  • Booking fees are sometimes charged as a non-refundable fee.
  • Solicitor’s fees, although remortgage offers may include free legal work as a perk.
  • Valuation fees to ensure the lender is confident they know the market value of your home.
  • Early repayment charges if you’re deciding can I remortgage during a fixed term.
  • Exit fees, separate from early exit charges, if the original lender charges a completion fee.
  • Broker's costs are normally offset by the savings you make by remortgaging with independent advice.

What’s a remortgage broker? A broker independently assesses your requirements, compares thousands of potential products, and recommends the right lender and remortgage deal.

We also ensure you’re confident about when should you remortgage and make informed decisions, particularly if you’re unsure do you have to remortgage, or whether you would save money by staying with your current lender.

Do You Need a Deposit to Remortgage for a Much Higher Value?

A remortgage is secured against your home, so your equity acts in place of a deposit – you won’t need to put down a cash deposit as you would with an initial property purchase. What does remortgaging a house mean to utilise your equity? Let's say your property is worth £500,000 and you have a mortgage of £300,000 – you owe 60% of the property value and own equity of 40%.

Do you have to remortgage? Not at all; there is no obligation to remortgage. However, if you're looking into can you remortgage to pay off debts or restructure other financings, it may be a viable solution. Likewise, should you remortgage after a fixed term varies, but the right action is normally to proceed to avoid paying more interest than necessary.

Please contact Revolution Finance Brokers at any stage if you'd like more guidance about what’s a remortgage for and whether it's the best option for you.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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Frequently Asked
Questions

The best time to remortgage will depend on several variables, including your mortgage contract and financial position. For most homeowners, the best time to remortgage is when a fixed-term deal ends – remortgaging at this stage means you avoid switching to the higher SVR interest rate but won't incur an early settlement charge.

Lenders commonly levy early exit or settlement fees to stop borrowers from exiting a fixed-term mortgage contract before the end of the term. This fee is often a percentage of the outstanding balance, around 5% on average, but can also be a fixed value – you should check the terms of your mortgage before you make any decisions about remortgaging during a fixed period.

The new mortgage, either through the same or a different lender, repays the old mortgage in full. You won't have two mortgage products, but the remortgage takes over from the previous home loan. If you are remortgaging with the same lender, this is called a product transfer, but the nature of a remortgage remains the same.

No, it would be highly unusual to need a cash deposit to proceed with a remortgage because the lender will use the equity in your home as security against the loan. When taking out a mortgage for the first time, you need a deposit because the lender won't offer 100% of the property value. The same applies to a remortgage, so you can remortgage up to a maximum of 90% of the property valuation.

Remortgaging means you take out a new mortgage product that pays back your previous home loan. You can remortgage to increase your borrowing and release equity, consolidate debts, reduce the loan balance or switch to a more competitive interest rate.

You can remortgage whenever you choose, although some periods are more suitable. For example, if you wait too long after a fixed term ends, your interest rates will likely increase. However, if you remortgage too early, you might incur an expensive early exit fee.

In most cases, it is highly advisable to remortgage when a fixed-term deal has ended. The norm is for the lender to move your interest charges onto their Standard Variable Rate (SVR), typically much higher than the interest rates they'd offer for a new fixed-term remortgage.

No, there is no obligation to remortgage – if you're happy that your mortgage is competitive and suitable and you can't get a better deal from any other lender, you can stay where you are.

Yes, a debt consolidation remortgage means you increase the amount you borrow against the value of your property and use the capital raised to pay off other debts. The interest rates on a mortgage are much lower than on short-term debt, although you might pay more overall since the terms will be longer.

You can, but it is important to triple-check the exit fees you might incur if you remortgage inside a fixed-term contract. If the remortgage is highly preferable, and you stand to save a substantial amount, it might make sense to accept the early settlement fee and proceed, although this is unlikely.

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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