Refinancing
Refinancing means replacing or reorganising existing borrowing. You might want a different repayment structure, a new lender or additional funds, but the starting point is what you owe now and what you want the change to achieve.
A smaller monthly payment can come with a longer term or greater total cost. Compare the new commitment with the existing one, including charges for leaving it, and be especially careful if other debts would become secured against your home.
Be clear whether you want to change a rate, raise funds or alter repayment arrangements. These are different aims and may have different alternatives. If you only need a new residential mortgage deal, a remortgage or product transfer may be the relevant comparison.
List balances, interest rates, remaining terms and any early repayment charges. Replacing borrowing can incur costs even when the new monthly figure looks lower. Existing security and lender conditions can also affect what changes are possible.
Compare how much you would repay and for how long. Extending the term can make monthly payments smaller while increasing total interest. Adding fees to borrowing can increase the cost further because interest may then be charged on those fees.
Combining several debts into borrowing secured on your home changes more than the number of payments. Debts that were previously unsecured would put your home at risk if you could not meet the new arrangement. A lower interest rate does not automatically mean a lower overall cost if repayment is extended over many more years.
Consider the total repayable, any fees and alternatives before deciding. If you are already struggling with debts, free debt advice can help you understand options that do not involve further secured borrowing. Any proposed refinance must be assessed for your circumstances and purpose; it is not a guaranteed way to resolve arrears or make existing commitments affordable.
Think carefully before securing other debts against your home. By extending the term of those debts, you may increase the total amount you repay.
We’ll start with your circumstances and what you need from a mortgage, so we can explore the options available to you.
We’ll compare suitable deals from the lenders available to us and explain the repayments, fees and other costs.
If you decide to go ahead, we’ll guide you through your mortgage application and the information your lender needs.
Remortgaging normally means moving a mortgage to a new lender. Refinancing is a wider description that can include changing the borrowing structure or purpose. The appropriate route depends on the existing loan, security and what you want to change; the terms should be explained rather than relying on the label.
No. A lower rate can be outweighed by fees, charges or a longer repayment period. The comparison needs to use the relevant loan amounts and terms. Any expected saving should be assessed against the actual costs and conditions of both arrangements.
MoneyHelper’s debt advice locator can help you find free, confidential support. Contact existing lenders early if repayments are becoming difficult. Getting advice about the whole situation can be more useful than immediately applying for another loan or securing more debt against a property.
Your home may be repossessed if you do not keep up repayments on your mortgage.
