Remortgages

A remortgage (also known as refinancing) is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security. Although remortgages are not unique to the United Kingdom, the term is mainly used commercially in the UK.

Often the purpose of switching is to secure a more favourable interest rate from a different lender. Borrowers may ask for a quote from several lenders to remortgage the property at various times during the term of the original mortgage, and may or may not remortgage depending how favourable the quotes are. Many lenders include penalty clauses in the original mortgage agreement precisely to deter borrowers seeking quotes for remortgages.

Remortgaging does not usually involve moving home or taking out a second mortgage on the property; effectively the mortgage is transferred from one lender to another, or from one product to another with the same lender.

There are several reasons why homeowners may choose to remortgage, including to reduce the size of repayments, to pay off a mortgage more quickly, to raise capital, or to consolidate the mortgage with other debts.