Will I Get Money Back if I Remortgage? What Really Happens When You Switch

If you’re thinking about remortgaging, you might wonder if you’ll get a lump sum back. The answer is: maybe, but it’s not automatic. It really depends on how much equity you’ve built up in your home and what type of remortgage you go for.

Let’s say your property’s value is higher than your current mortgage balance. That’s equity, and some lenders let you unlock a chunk of it—this is called a cash-out or equity release remortgage. But it doesn’t mean free money. You’ll be borrowing more, and that usually means bigger monthly repayments and more total interest over time.

The process isn’t just about switching to a lower rate. If you want cash back, you have to ask for a higher mortgage amount than you owe now. That extra cash lands in your bank account after your old mortgage is paid off. Sounds tempting? Before jumping in, it’s smart to look at all the fees, possible penalties, and check if the new deal really works out better for you—both now and years from now.

• What Actually Happens When You Remortgage
• When Can You Get Money Back?
• How Cash-Out Remortgaging Works
• Costs, Caveats, and Risks to Watch For
• Real Numbers: Examples and Scenarios
• Tips for Making the Most of Your Remortgage

What Actually Happens When You Remortgage

Remortgaging means swapping your current home loan for a new one, usually with a different lender. People usually do this to get a better interest rate, adjust the loan length, or unlock some cash tied up in their property. The process is pretty straightforward, but there are a few things that always happen every time.

First, you find a lender offering a mortgage that suits your needs—maybe a lower rate or the ability to borrow more. The new lender checks your credit report, your income, your expenses, and, of course, does a fresh valuation on your property. They want to make sure your home’s value really covers the amount you want to borrow.

If everything lines up, the new lender makes a formal offer. You’ll get all the details—loan amount, new rate, fees, and how your payments will change. If you accept, your old mortgage is paid off using the funds from the new loan. Any extra money (if you borrow more) lands in your bank account, and you start making payments to the new lender instead.

• If you’re not borrowing any extra, you only need to think about the interest rate, fees, and how your monthly payments compare with what you pay now.
• If you want money back—even just a small amount—the new lender increases your balance, and the repayments reflect that.
• You might have to pay exit fees or early repayment charges on your old mortgage. Always check the numbers so the switch actually saves—or earns—you money.

This whole process usually takes four to eight weeks. It often moves faster if all your paperwork is ready and your lender isn’t swamped at the time you apply. Most people remortgage every two to five years, mostly because lenders use their best deals to lure in new customers, not keep existing ones happy.

For many, the remortgage process is about saving cash, but it can also open the door to more borrowing if you need it for things like home improvements. Just remember: you’re taking on a new long-term commitment, so it pays to know all the steps and watch out for hidden costs.

When Can You Get Money Back?

Getting money back from remortgaging isn’t just wishful thinking—it actually happens, but only in certain cases. The key is having enough equity built up in your home. Equity is simply the gap between your home’s value and how much you still owe on your current mortgage.

The most common scenario where people get cash is called a cash-out remortgage, or sometimes, equity release. In plain English, you ask your lender for a new, bigger mortgage that replaces your old one. The difference—the extra amount you borrow—gets paid out to you as cash.

• Your home’s value has increased since you bought it.
• You’ve paid down a lot of your old mortgage.
• You don’t have big debts secured on your property (like second charges).

Banks usually let you borrow up to 75-85% of your home’s value. But remember, every extra pound you take out is added to your mortgage debt, so your monthly payments go up. Here’s a look at what the numbers could mean:

Sometimes, lenders offer small cashback deals as part of new remortgage products. These tend to be a few hundred pounds, not life-changing amounts, and usually come with higher interest rates. Always read the small print.

If you’re just switching lenders for a better rate and aren’t borrowing extra, you usually won’t see any cash hit your account. The main goal is a lower monthly payment, not a payout.

The bottom line? You only see money back if you borrow more than before or select a deal with cashback. For folks wanting to fund big expenses like renovations or debt consolidation, this can be handy—but it’s not a free windfall.

Thinking of a remortgage for cash? Make sure it actually fits your long-term plans and budget before signing up.

How Cash-Out Remortgaging Works

Cash-out remortgaging is when you switch your mortgage to a new one for more than you owe, then pocket the difference. This option is pretty popular with homeowners who want to cover big expenses like renovations, pay off debts, or just free up some cash for emergencies.

Here’s the deal: you need enough equity in your home. If your house is worth £350,000 and you owe £200,000 on your current mortgage, that’s £150,000 in equity. Lenders may let you borrow up to 80%-90% of your property’s current value, but not always the full amount.

It works like this:

• Get your property valued—lenders arrange this, and their numbers tend to be slightly conservative.
• Decide how much extra you want to borrow. This is usually capped based on the loan-to-value (LTV) ratio—meaning how much you borrow versus what your home is worth.
• Your lender reviews your finances, checks your credit, and makes sure you can afford the new, bigger repayments.
• When the deal completes, the old mortgage is paid off. The leftover cash goes straight to your bank account.

Don’t expect to get every penny of your equity as spendable cash. Lenders usually want some cushion for risk, and the higher your LTV, the higher your interest rate will likely be.

Here’s a quick look at typical numbers for cash-out remortgaging:

The most important thing: you’re increasing your mortgage debt. Your monthly repayments will go up, so run the numbers and be sure the move fits your budget. Lenders will check your income, spending, and existing debts before signing off. Also, costs and fees—think arrangement charges, early repayment charges on your old deal, and legal fees—can eat into the cash you receive.

If you’re using a broker or an adviser, ask them about the best remortgage rates available for cash-out. Sometimes the extra cash seems like a no-brainer until you see the long-term interest or the jump in your monthly bills.

Costs, Caveats, and Risks to Watch For

This is where people trip up with remortgaging. Getting money back sounds great, but the extra costs and long-term risks can spoil the party if you’re not careful. Here’s what you really need to think about before going ahead.

• Remortgage fees: Lenders love their fees. Expect an arrangement fee, legal fees, valuation fees, and possibly a broker fee. Arrangement fees alone can hit £1,000 or more. Some lenders let you add this to your mortgage, but then you’re paying interest on it too.
• Early repayment charges (ERC): Still locked in your current deal? Many mortgages have early repayment charges—sometimes 1–5% of your remaining loan. If your balance is £200,000, a 2% charge equals £4,000 gone instantly.
• Higher interest over time: Pulling more cash from your equity stretches out payments and increases how much interest you’ll pay over the years. That cash-back can cost a lot in the long run.
• Loan-to-value (LTV) changes: The more you borrow against your house, the higher your LTV. Lenders might put you in a less competitive rate band if you cross a certain threshold, so double-check how your deal stacks up.
• Affordability checks: You’ve still got to pass the lender’s stress tests. If your income or credit has changed since your last application, extra borrowing could be a problem.
• Impact if house prices drop: If the market dips and you’ve maxed your mortgage, you could end up in negative equity—owing more than what your house is worth.

Here’s a quick look at the typical numbers you might face:

Watch out for offers that seem too good to be true. Lenders sometimes reel borrowers in with a low headline rate but claw it back with chunky fees or sky-high charges if you leave the deal early. Always do the sums on total cost, not just the monthly payment, and think twice before borrowing more for non-essentials.

Real Numbers: Examples and Scenarios

Numbers make everything clearer, so let’s break down exactly how much cash you could get if you remortgage—and what it’ll cost you. The main thing to remember is your equity: that’s your home’s current value minus what you still owe.

Example 1 – Basic Cash-Out

• Your home is valued at £300,000.
• You still owe £180,000 on the mortgage.
• Your equity: £120,000.
• Many lenders let you remortgage up to 85% of your property value: 85% of £300,000 is £255,000.
• If you take a new mortgage at £200,000, you’d pay off the old mortgage (£180,000), and get £20,000 as cash-back (minus fees and costs).

Example 2 – Staying Put Without Extra Cash

• Your home is worth £250,000.
• You owe £150,000.
• You remortgage for the same amount (£150,000), usually just to get a better rate—no money comes back your way this time.

Here’s a pro tip: while lenders say you can borrow up to 85% of your home’s value, most people don’t go that high. The higher you borrow, the higher your repayments will be, and you might need to pay for extra mortgage insurance. Some lenders max out at 80% for cash-out, especially if house prices are shaky.

And don’t forget the remortgage fees. Legal fees can be £300 to £1,000, valuation fees are often £150 to £400, plus some lenders want an arrangement fee of £999 or more. If you’re locked into your current mortgage, check if there’s an early repayment charge—it can be 1% to 5% of your mortgage amount.

Not sure if you’ll walk away with money? Here’s what you’ll need to do the maths:

1. Get an accurate valuation from a local surveyor or your lender.
2. Check your current mortgage balance from your statement or online portal.
3. Ask lenders what their maximum loan-to-value (LTV) is for a cash-out remortgage.
4. Subtract your current mortgage balance from the new mortgage amount you qualify for.
5. From the leftover number, deduct fees and charges—that’s what could hit your bank account.

So, while getting a lump sum from your remortgage is possible, don’t let the numbers trip you up. Always check your equity, work out the borrowing costs, and double-check the small print before signing anything.

Tips for Making the Most of Your Remortgage

So you’re set on remortgaging and want to get the best outcome? There are a few smart moves you can make to save money and avoid regret down the line. Let’s go through the steps that people usually overlook—but seriously make a difference.

First, check your current lender’s early repayment charges. Lots of folks get caught off guard when they see a few thousand pounds shaved off their equity just for ending their deal early. Some banks charge 1–5% of the remaining mortgage balance, so don’t ignore the small print.

Your credit score matters more than you think. Lenders will look for a solid track record before approving extra borrowing. A poor score can mean higher interest rates or even a flat-out rejection. Use a free credit check service to spot mistakes and fix them ahead of time.

• Compare deals across at least three lenders — some specialise in remortgage deals or have special rates for cash-out options.
• Work with a fee-free mortgage broker if crunching the numbers isn't your thing—they can flag up hidden costs you might miss.
• Don’t just focus on the monthly payments. Ask for the total amount you’ll pay over the whole mortgage term. Sometimes, low monthly numbers hide hefty long-term costs.
• Plan how you’ll use any cash released. Splurging it might feel great, but reinvesting or paying down high-interest debts usually makes more sense.

Some people worry about increasing their borrowing because it means more risk. If house prices drop, you might owe more than your home is worth—a situation called ‘negative equity’. Decide how much extra you really need instead of grabbing the max.

Here’s a look at common remortgage fees and how they can affect your pocket:

Remember to ask if your new lender will cover any fees—they sometimes offer free valuations or legal work to get your business. And finally, don’t rush. The best time to line up your new deal is three to six months before your current deal expires. That way, you avoid the dreaded standard variable rate and can snag the most competitive deals before your options run thin.