One of the best ways to save hundreds, or even thousands, of pounds a year is to remortgage your property. But there's been a lot of talk recently about lenders closing their doors to remortgages. Apparently we borrowers are getting far too savvy about money these days and some of them are getting fed up with customers who flit off to another lender at the merest sniff of a better interest rate. They call us 'rate tarts' in the industry! (Cheek!)

So far, only a handful of lenders have taken action of some kind but more could follow soon. So if you've been thinking about remortgaging, perhaps you'd better get your skates on. For the time being, here's how you should go about it.

Look At Your Current Lender

First of all, take a look at your current lender's website and browse through it. Pretend you're a brand new customer looking for your first ever mortgage. Most of them provide calculators that will enable you to punch in a few details so they can give you an up-to-date 'quotation' for the sort of mortgage they might be prepared to give you on the basis of your earnings and their current rates. Enter the amount of your current mortgage (if you've paid off some of it, make sure it's what you've got left to pay) and the remaining term, and see what it churns out. Surprised? I bet you are! You're probably paying far more each month for an identical loan over the same period than a new customer would!

You'll probably find your lender also has a calculator for remortgages. These aren't for you - they're for new customers who might be thinking of switching over from their current lender. See what comes up when you enter your details in this particular calculator. Another surprise?

Does your current lender appear to favour new customers rather than you - the loyal one who's steadily been paying them huge wodges of money for more years than you care to remember?

Other Lenders

Not that long ago, there were no such things as fixed or discount or flexible mortgages. Most people were on the standard variable rate because that's all there was on offer. In fact, rather a large number of people are still on the standard variable rate because it hasn't occurred to them to look elsewhere for a better deal. And all the hassle involved in buying a house in the first place seems to put people off trying to remortgage. But it's not as hard as you think.

There's a huge choice of mortgages, now that lenders have been forced to become more competitive and, at the moment, they want you. So take advantage of it!

So - what you need to do next is decide what type of mortgage you want and then see what's on offer. Put out a few tentative feelers to see if they would be happy to take you on just in case you decide to move your account. Then comes the fun bit. You ring up your own lender and say something like: "Hello, I've got a mortgage with you that seems rather expensive so I've been thinking about moving to Mortgages R Us because they've got a rather good deal on offer at the moment."

With a bit of luck, your lender will cry: "Waaaaa! Boo Hoo! Don't leave us, purleeze! Sob!" and will offer you the opportunity of switching your mortgage to the one you actually want.

Strictly speaking this is not actually a remortgage. Your aim is to change the product you have with your current lender and the verbal exchange above is obviously a simplification of your possible negotiating technique, but it seems to have worked for quite a number of people.

When the more Foolish among us started trying this a few years ago, the reaction was usually: "Er, Bye Bye, then". But you know what? People started walking. Mortgage lenders found they were losing customers because of their intransigence. And losing customers meant losing money. Nowadays, many of them have departments specially set up to deal with current customers who are thinking of transferring to another lender, and they have the authority to offer these customers special deals on a case-by-case basis -- especially to the long-standing customers. They're sometimes known as 'under-the-counter' deals and you can read an example of how one Fool did it here.

There are obviously some caveats to this procedure. You may, for example, be locked in to your current mortgage with heavy redemption penalties to pay should you move, which means they've got one up on you. So you will need to do a few sums to see if the savings you'll make are worth it.

Also, your current lender may demand a rearrangement fee to change your account details. This can be in the region of £250, so if you're in a strong position then it's probably a good idea to challenge this. "Er, excuse me! You want to charge me £250 to make me stay with you?" If they really think they're going to lose you, they might reduce or even waive the fee altogether.

Making The Switch

The benefit of staying with your current lender is that, really, you hardly have to do anything. There are little or no legal or valuation fees to contend with, as that was all paid for when you first bought the property. They simply draw up a new contract and you sign it.

If you switch to a new lender you will face the same sort of costs that you would if you were buying from scratch, apart from stamp duty. Not only will you have the usual legal and valuation fees -- but your old lender may well charge you a 'closing down' fee.

You should look out for lenders who will pay some of these costs for you. As an enticement to encourage new customers, some lenders offer to pay the legal or valuation fees - or else they'll offer a cashback, which will cover all or part of the costs of switching. It's up to you to do the figures to decide whether it's worth your while in the long term - particularly if you have stringent redemption penalties.

One thing to watch out for is that, in the month that you switch, your final payment to the old lender and your first payment to the new may overlap. Make sure you've got the money to cover this situation should it arise.

Next:

• Selling Your Home

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