Homeowner Checklist: What to Do Before Remortgaging

Remortgaging can open the door to better rates, lower monthly payments, or access to your home’s equity, but success starts long before signing the paperwork. Whether your fixed term is nearing its end or you are simply looking for a better deal, the key is preparation.

A little groundwork now can save you thousands later. With lenders tightening their criteria and competition for the best rates growing, being organised is more important than ever.

Let's walk through everything you need to tick off your list before you start your remortgage journey, from checking your current mortgage situation to gathering all those important documents that seem to disappear just when you need them most.

Assess Your Current Mortgage Situation

Before looking for new deals, take time to understand your existing mortgage in detail. Start by reviewing your current agreement to identify key terms such as your mortgage type, the end date of your fixed-rate period, and what rate you will move onto afterward.

Most fixed-rate mortgages last between two and five years before switching to the lender’s standard variable rate, which is usually higher. Knowing when this change happens helps you plan your remortgage timeline, ideally three to six months before your current deal ends.

Next, check whether early repayment charges apply. These fees, typically between 1% and 5% of your remaining balance, can add up quickly if you leave your deal early. For instance, a 3% charge on a £200,000 mortgage means paying £6,000 just to switch. Compare this cost with potential savings from a lower interest rate to decide whether remortgaging now makes sense or if waiting would be smarter.

Finally, confirm your current interest rate and compare it to what’s available in the market. Even a one-point difference, such as moving from 4.5% to 3.5%, could save you hundreds each month. Understanding your current position gives you the clarity and confidence to make informed choices before starting the remortgage process.

Evaluate Your Financial Position

Your financial circumstances might have changed significantly since you took out your original mortgage. Whether things have improved or become more challenging, you need a clear picture of your current financial health before approaching lenders.

Review Your Income and Employment Status

Lenders will scrutinise your income more carefully than ever, especially in today's economic climate. If you've changed jobs recently, been promoted, or started working for yourself, these changes will affect your remortgage application.

Self-employed? You'll typically need at least two years of accounts, though some lenders might accept one year with a strong track record. If you've recently become self-employed after years of employment, this could temporarily limit your options, but don't worry, some specialist lenders understand these situations.

Have you received a pay rise since your last mortgage? Brilliant. This could help you access better rates or borrow more if you're looking to release equity. On the flip side, if your income has decreased, you'll need to be realistic about what you can afford and which lenders might still consider your application.

Assess Your Monthly Budget and Affordability

Lenders don't just look at your income anymore; they want to see the full picture of your monthly incomings and outgoings. This means scrutinising everything from your Netflix subscription to your children's school fees.

Take a hard look at your bank statements from the last three to six months. Lenders will be doing the same thing, looking for regular committed expenditure and any signs of financial stress. Regular gambling transactions, frequent use of overdrafts, or multiple payday loans could raise red flags.

Work out what you can genuinely afford each month. Remember, interest rates might be different from when you first bought your home, and while you might secure a better rate, you should also consider what would happen if rates rise in the future. Stress-test your budget by calculating what your payments would be if rates increased by 2-3%.

Check and Improve Your Credit Score

Your credit score is like your financial CV; it tells lenders how reliable you've been with credit in the past. A strong credit score can be the difference between accessing the market's best rates and being stuck with mediocre offers.

Obtain Your Credit Report

First things first, you need to see what lenders will see. You can get your credit report for free from agencies like Experian, Equifax, or TransUnion. Don't just check one; different lenders use different agencies, and there might be variations between them.

Look through your report with a detective's eye. Check every account listed is actually yours and that all the information is accurate. That old mobile phone contract you thought you'd cancelled but didn't? It could be dragging down your score if payments are still being missed.

Address Any Credit Issues

If there are errors on your report, contact the credit agency immediately to dispute them. They're legally required to investigate and correct genuine mistakes.

For legitimate issues, start addressing them systematically. Missed payments from years ago will have less impact than recent ones, but showing a pattern of improvement helps. Set up direct debits for all your regular bills to guarantee nothing gets missed going forward.

If you're not on the electoral roll at your current address, get registered immediately. This is a quick win that can boost your score. Similarly, if you have old credit cards you don't use, consider whether closing them might help.

Avoid applying for new credit in the months leading up to your remortgage application. Each application leaves a footprint on your credit file, and multiple applications can make you look desperate for credit.

Determine Your Property's Current Value

The value of your property has a massive impact on the mortgage deals available to you. If your home has increased in value since you bought it, you could access better rates. But if it's decreased, you might find your options more limited.

Get a Property Valuation

Start with online valuation tools from Rightmove or Zoopla; they'll give you a rough idea based on recent sales in your area. But take these with a pinch of salt: they're estimates based on averages and don't account for your property's specific features or condition.

For a more accurate picture, consider getting a local estate agent to provide a valuation. Most will do this for free, hoping you'll use them if you decide to sell. Get at least three valuations to guarantee you're getting a realistic figure, not just one agent's optimistic estimate.

Remember, the valuation that really matters is the one the mortgage lender's surveyor provides. They tend to be more conservative than estate agents, so if you're borderline for a particular loan-to-value bracket, be prepared for the possibility that the lender's valuation might come in lower.

Calculate Your Loan-to-Value Ratio

Your loan-to-value (LTV) ratio is the percentage of your property's value that you need to borrow. It's an essential figure because mortgage rates are structured around LTV brackets, typically 60%, 75%, 80%, 85%, and 90%.

To calculate your LTV, divide your outstanding mortgage balance by your property's current value and multiply by 100. For instance, if you owe £150,000 on a property worth £250,000, your LTV is 60%.

The lower your LTV, the better rates you'll access. Even dropping into the next bracket down can save you significant money. If you're close to a boundary (say, 76% LTV), it might be worth using savings to pay down your mortgage to hit that 75% threshold and open up better rates.

Research the Mortgage Market

Now you know where you stand, it's time to see what's out there. The mortgage market changes constantly, with new products launching and rates shifting in response to Bank of England decisions and economic conditions.

Compare Different Mortgage Types

• Fixed-rate mortgages: A fixed-rate mortgage keeps your monthly payments the same for the whole fixed term. This makes budgeting easier because nothing changes even if interest rates move. Two-year fixes are usually cheaper than five-year fixes, but you will need to remortgage sooner.

• Tracker mortgages: A tracker mortgage moves in line with the Bank of England base rate plus a set margin. If the base rate changes, your payments change too. These can work well when rates are falling, but they can become costly when rates increase.

• Discounted variable rates: A discounted variable rate gives you a temporary discount on the lender's standard variable rate. It can be cheaper at the start, but your payments can rise if the lender increases its SVR. This type of deal suits people comfortable with possible payment changes.

• Offset mortgages: An offset mortgage connects your savings to your mortgage balance, so you pay interest on a smaller amount. This can help reduce your overall cost if you have strong savings. Rates may be slightly higher, but the interest savings can make up for it.

Shop Around for the Best Rates

Don't just check with your current lender, though; do ask them what they can offer existing customers. Sometimes they have retention deals that aren't advertised publicly.

Use comparison websites to get a broad view of the market, but remember they don't show everything. Some lenders don't appear on comparison sites and only work through brokers or direct applications.

Look beyond the headline rate. A mortgage with a slightly higher rate but lower fees might work out cheaper over the full term. Calculate the total cost, including all fees, not just the monthly payment.

Consider using a platform like Mortgage Connector to get matched with brokers who have access to exclusive deals and can navigate the complexities of different lenders' criteria. They often have access to rates not available to the public and can advise which lenders are most likely to accept your application.

Prepare Your Documentation

Nothing slows down a remortgage application quite like scrambling for documents at the last minute. Getting everything ready in advance means you can move quickly when you find the right deal.

Gather Financial Documents

• Proof of income: Employed borrowers usually need their last three months of payslips and sometimes a P60 from the previous tax year. Some lenders may also ask for your employment contract if you recently started a new job.

• Self-employed documents: Most lenders ask for two to three years of accounts, ideally prepared by an accountant. SA302 forms and tax year overviews from HMRC are required. If your income changes a lot from year to year, be ready to explain the reasons.

• Bank statements: Lenders typically want three to six months of bank statements. These should be downloaded as PDFs because screenshots are often rejected. They will check your spending habits and make sure the income on your statements matches what you declared.

• Savings evidence: If you are using savings for fees or to lower your LTV, you will need statements that show where the money came from. Large deposits without a clear explanation can delay your application until you provide proof that they are legitimate.

Organise Property Information

Your original mortgage paperwork should include much of what you need, but lenders might request additional information. Building insurance documents prove you're protecting their security. If you've done major renovations, building control certificates show the work was done properly.

Leasehold property? Your lease document is essential, and lenders will want to see at least 70-80 years remaining. Ground rent and service charge statements for the last year demonstrate these ongoing costs.

If you've had any insurance claims on the property, especially for subsidence or flooding, have the details ready. These issues don't necessarily prevent remortgaging, but lenders need to know about them.

Consider Professional Advice

While it's possible to remortgage directly with a lender, working with a mortgage broker can save you time, money, and stress. They have access to the whole market, including deals not available directly to consumers.

A good broker knows which lenders are most likely to accept your specific circumstances. Got a complex income structure? They'll know who's flexible. Credit blips in your past? They'll identify lenders who look at the bigger picture.

Brokers can also speed up the process significantly. They speak the lenders' language, know exactly what documentation is needed, and can often get faster responses on applications.

The expertise a broker brings is particularly valuable if you have any complications, perhaps you're self-employed, have adverse credit, or your property is non-standard construction. They'll know which lenders are most likely to say yes and can present your application in the best possible light.

Conclusion

Preparing for a remortgage might seem like a lot of work, but each step you take increases your chances of securing a better deal. Start early, ideally three to six months before your current deal ends, and work through these steps methodically.

Remember, the mortgage market is competitive, and lenders want your business. By presenting yourself as an organised, creditworthy borrower with all your documentation ready, you're in the strongest possible position to negotiate.

The effort you put in now could save you thousands of pounds over the coming years. Whether you handle the process yourself or work with a professional, being prepared means you can move confidently and quickly when the right opportunity presents itself.

Your remortgage is a chance to reassess your financial situation and potentially improve your terms. With proper preparation, you're not just ready to remortgage, you're ready to make a decision that could significantly improve your financial future.

Frequently Asked Questions

What documents do I need to prepare before remortgaging?

You'll need three months' payslips and P60 if employed, or 2-3 years' accounts if self-employed. Also, gather 3-6 months of bank statements, proof of savings, building insurance documents, and your original mortgage paperwork. Having these ready speeds up your application considerably.

How far in advance should I start preparing to remortgage?

Start preparing three to six months before your current deal ends. This gives you time to check your credit score, gather documents, research the market, and potentially fix any credit issues. Starting early helps you avoid your lender's expensive standard variable rate.

Can I remortgage with bad credit in the UK?

Yes, remortgaging with bad credit is possible through specialist lenders who consider your overall circumstances. While you may face higher rates, showing recent payment improvements helps. A mortgage broker can identify lenders most likely to accept your application despite credit issues.

Should I pay early repayment charges to remortgage?

Only if the savings outweigh the costs. Calculate your ERC (typically 1-5% of your balance) against potential savings from a new rate. If you won't recover the ERC cost within 12-18 months through lower payments, it's usually better to wait.

Is it worth using a mortgage broker for remortgaging?

Mortgage brokers can access exclusive deals unavailable to the public and know which lenders suit your circumstances. They're particularly valuable if you're self-employed, have complex income, or have non-standard property. Their expertise often secures better rates that offset any fees charged.