Remortgage
A mortgage is a loan taken out to buy property or land. Typically, mortgages are taken out for the purchase of homes and run for 25 years but mortgages are also available for commercial properties, and the term can be shorter or longer. The loan is ‘secured’ against the value of the property or land until it is paid off.
Remortgaging (or ‘refinancing’ in the United States) is the process of taking out a new mortgage on the property or land. This may be done when the terms of the mortgage change, or to take advantage of a better deal offered by a different mortgage product, or to borrow additional money.
For example, fixed mortgages rates, particularly ones that offer low interest rates, may only last for a limited time – around 2 to 5 years. When this period ends, the lender will generally move the mortgage onto a standard variable rate (SVR) which is often higher than the previous interest rate. In this situation, there may be cheaper interest rates available on the market which could save the borrower substantial sums of money. As a result, they may remortgage the property.
Some other reasons why property owners may choose to remortgage include:
- The property value has increased since the first mortgage was taken out, making the it eligible for lower rates.
- There is a concern that interest rates may go up.
- In order to pay off the mortgage earlier.
- To raise capital for home improvements, to pay off other debts, etc.
- For a more flexible mortgage that will allow some payments to be missed (‘payment holidays’).
Before remortgaging, it is important that the property owner carefully assesses all the cost implications. For example, they may be required to pay an early repayment charge to the existing mortgage lender which can be high, as well as an exit fee. These should be compared with the savings that can be made by switching to a different mortgage product.
[edit] Find out more
[edit] Related articles on Designing Buildings Wiki
- Buy-to-let mortgage.
- Collateral.
- Construction loan.
- Council of Mortgage Lenders.
- Equity and loan capital.
- Equity in property.
- Freehold.
- Funding options.
- Green mortgage.
- Ground rent.
- Land value.
- Leaseback.
- Mezzanine finance.
- Property chain.
- Property ownership.
- Shared equity / Partnership mortgage.
- What is a mortgage?
Featured articles and news
Future Homes Standard Essentials launched
Future Homes Hub launches new campaign to help the homebuilding sector prepare for the implementation of new building standards.
Building Safety recap February, 2026
Our regular run-down of key building safety related events of the month.
Planning reform: draft NPPF and industry responses.
Last chance to comment on proposed changes to the NPPF.
A Regency palace of colour and sensation. Book review.
Delayed, derailed and devalued
How the UK’s planning crisis is undermining British manufacturing.
How much does it cost to build a house?
A brief run down of key considerations from a London based practice.
The need for a National construction careers campaign
Highlighted by CIOB to cut unemployment, reduce skills gap and deliver on housing and infrastructure ambitions.
AI-Driven automation; reducing time, enhancing compliance
Sustainability; not just compliance but rethinking design, material selection, and the supply chains to support them.
Climate Resilience and Adaptation In the Built Environment
New CIOB Technical Information Sheet by Colin Booth, Professor of Smart and Sustainable Infrastructure.
Turning Enquiries into Profitable Construction Projects
Founder of Develop Coaching and author of Building Your Future; Greg Wilkes shares his insights.
IHBC Signpost: Poetry from concrete
Scotland’s fascinating historic concrete and brutalist architecture with the Engine Shed.
Demonstrating that apprenticeships work for business, people and Scotland’s economy.
Scottish parents prioritise construction and apprenticeships
CIOB data released for Scottish Apprenticeship Week shows construction as top potential career path.
From a Green to a White Paper and the proposal of a General Safety Requirement for construction products.
Creativity, conservation and craft at Barley Studio. Book review.
The challenge as PFI agreements come to an end
How construction deals with inherited assets built under long-term contracts.
Skills plan for engineering and building services
Comprehensive industry report highlights persistent skills challenges across the sector.
Choosing the right design team for a D&B Contract
An architect explains the nature and needs of working within this common procurement route.
Statement from the Interim Chief Construction Advisor
Thouria Istephan; Architect and inquiry panel member outlines ongoing work, priorities and next steps.