Published: 4 July 2024
It’s fair to say the mortgage market saw some ups and downs in 2023 and 2024. But if you want to move your mortgage to a new product with a new lender, we’re here to help. We’ve got the answers to some key remortgage questions – including what could happen if the value of your property has gone up or down.
Why remortgage?
Despite the current market, there are a few reasons why you might want to remortgage your home. These include:
- If your current rate deal is ending soon.
- You’re shopping around for a better deal from a new lender.
- You’re hoping to release equity from your property to help carry out building work or property repairs.
What happens during a home remortgage?
When you’ve decided to remortgage, you’ll choose a new mortgage deal which will have:
- A new term (how long the mortgage lasts for)
- A mortgage type (whether it’s a fixed rate or a variable rate)
- A new interest rate (the cost of borrowing the money)
You’ll need a property valuation too, to kickstart the remortgaging process.
It’s usually best to start your mortgage switch 6 months before the end of your current deal. This avoids spending time on your existing lender’s reversionary or Standard Variable Rate, for example. This is the interest rate you'll pay when your initial fixed or discounted rate ends. Because the interest rate is usually higher, it could increase your mortgage payments.
What’s a remortgage valuation?
To remortgage your home, you’ll need a valid house valuation so your lender can see how the price of the property has changed since you bought it.
They’ll want to know the loan-to-value ratio (LTV), which is basically how much the house is worth in comparison to how much you want to borrow. Lenders will always assess the LTV before they approve your new mortgage to make sure everything’s in check.
But when you remortgage, is your house revalued?
A valuation will always be needed when you’re looking to remortgage. This will usually be arranged by your lender, who might send a surveyor to your property. It’s worth checking if you have to pay a fee for this.
You can pay for your own house valuation if you wish but it’s not usually needed.
How to value my house
Aside from paying for your own valuation, if you’re wanting to find out what your property’s worth before going through with the remortgaging process, you can also arrange an online desktop valuation.
A desktop valuation works out the value of your home based on different factors. It will consider sales data that’s already been collected on similar properties nearby and estimate its value based on this information.
Remortgaging when your house value has increased
If you’re remortgaging and your property value has gone up, you might be in luck. Why? Because when this happens, there’s more equity in the property. This is the difference between what you owe on the mortgage and what your property is worth. Lenders often offer lower rates for homeowners whose property has a lower LTV ratio when remortgaging.
Remortgaging when your house value has decreased
If your property has decreased in value since you took out the mortgage, you might still be able to remortgage. It depends how much equity you have in the property. Just bear in mind that lenders offer better rates if a property’s LTV ratio is lower.
If you owe more on the mortgage than what it’s valued at, this is called “negative equity”. This is because your house is worth less than the amount the mortgage is for. And if you’re in currently in negative equity, you could speak to your existing lender or reach out for some specialist advice.
Discover more
Hopefully you’ve now got the right information to support your remortgaging journey, before, during and after.
You can also read our article on what remortgaging is to find out more information about the process.
This guide is intended as a summary only and does not constitute legal or financial advice given by Leeds Building Society. No reliance should be placed on this guide.
If you have any questions or queries, we recommend you seek independent legal advice and/or financial advice.
