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Guide to moving your mortgage

Why remortgage?

Remortgaging means switching your current mortgage to another mortgage lender, without moving house.

You may be thinking of remortgaging for a number of reasons including; saving money if you’re coming to the end of your current mortgage deal or paying a high rate of interest; raising additional money to improve your home or for other reasons such as changing the term, the repayment type or parties to your current mortgage.

Costs of remortgaging

You should consider carefully your reasons for remortgaging as you may incur costs in transferring your mortgage from one lender to another.

Your current mortgage provider may charge you an early repayment charge or mortgage exit administration fee, discharge fees and a deeds release fee. 

Plus when remortgaging to a new mortgage provider you may have to pay:

  • A valuation fee
  • An arrangement or booking fee
  • Legal fees
  • And other related fees.

Repaying your mortgage

There are three basic ways of repaying your mortgage: repayment, interest only or part repayment/part interest only.

  • With a repayment mortgage, also known as a Capital and Interest mortgage, you pay off interest on the loan and a portion of the capital each month. Providing all of the monthly repayments are paid in full and on time, you’ll gradually pay off the entire amount borrowed, as well as the interest, over the life of the mortgage.
  • With an interest only mortgage the payments you make each month only cover the interest on the loan. You’ll still owe the amount borrowed (‘the capital’) at the end of the mortgage term. It’s your responsibility to make sure that you have a suitable repayment plan* in place to repay the capital at the end of the mortgage term.
  • Part repayment/part interest only mortgage – this is where a portion of the loan is on a repayment basis and the remainder is on an interest only basis. Our interest only rules apply to the interest only element of the loan (see above for details).

* A repayment plan could include a savings or investment plan, such as an endowment policy, an ISA or a pension designed to repay the balance of a mortgage at the end of its term.