When you remortgage your property, you move your existing mortgage without moving to a new property. You look for a new loan – either with the same lender or a new one – that will pay off your existing loan.

There are several reasons why people remortgage their homes. If you took out your existing loan at a time when interest rates were high, you may now see the market is filled with new loans at far lower interest rates. Even if remortgaging meant paying an arrangement fee, you could still save a significant sum each month if you switched to a new deal. It is important to work out whether the savings gleaned from a switch would outweigh any arrangement fee you would need to pay. In some cases, it would not lead to savings.

Other people remortgage because they now have some equity in their property. This could be released to help with refurbishment costs or perhaps a new extension or similar work on the home. Another reason to remortgage might be to pay off debts elsewhere that have a high interest rate. Since mortgages have a much lower interest rate than unsecured loans, this could be a good way to reduce monthly payments and clear debts that are racking up a lot of monthly interest.

It is also common for people to remortgage when they reach the end of a current fixed rate deal. Moving onto a variable rate deal leaves the homeowner vulnerable to rises in the interest rate. That means looking for a new deal gives them more protection over the next few years.