Can You Remortgage If Your House Value Has Dropped, and What Are the Options?
- Christina Vassiliades
- Oct 2
- 5 min read
Updated: Oct 29
Last updated: 3 October 2025
Yes, you can often remortgage even if your property’s value has fallen, but the options and rates available will depend on how much equity remains in your home.
If your property is now worth less than when you bought it, this is called negative equity when your outstanding mortgage is higher than the home’s market value. While it can limit your remortgage options, it doesn’t necessarily close the door. Some lenders, particularly specialist intermediary lenders may offer bespoke solutions, especially if payments have been maintained and the fall in value isn’t severe.
You may also consider product transfers, additional repayments, or short-term fixes until your loan-to-value (LTV) improves.
At Manor Mortgages, we’ve helped many clients successfully restructure their mortgage after a valuation dip. Call us on 01275 399299 for tailored guidance.
Table of Contents
Introduction
What happens when your house value drops?
Understanding equity and loan-to-value (LTV)
Can you remortgage in negative equity?
How much negative equity is “too much”?
Lender acceptance spectrum
Policy exceptions and mitigating factors
Product transfer vs full remortgage
Options if your house value has dropped
Case study: Remortgaging in a down market
How brokers help in falling-value cases
What underwriters and valuers assess
Market trends: What’s changed in 2025
Common mistakes to avoid
Expert tips for improving approval chances
FAQs
Glossary of key terms
Reader’s checklist: Questions to ask
Conclusion & next steps
1. Introduction
Falling property values can feel worrying especially when your mortgage renewal is due. But remortgaging after a drop in value isn’t always impossible. In fact, many homeowners successfully restructure even when their loan-to-value ratio (LTV) has increased.
2. What Happens When Your House Value Drops?
If your property value decreases, your equity (the portion you own outright) shrinks. For example, if you owe £200,000 on a property now worth £190,000, you have negative equity. Lenders see higher LTVs as riskier, which can limit access to the best rates.
3. Understanding Equity and Loan-to-Value (LTV)
Your LTV is calculated as: Mortgage Balance ÷ Property Value × 100. The lower your LTV, the better rates you can access.
For example:
60% LTV = strong equity, best rates
85–90% LTV = limited but available options
95–100%+ LTV = negative equity, restricted options
4. Can You Remortgage in Negative Equity?
Yes, but your choices are narrower. Most high-street lenders won’t remortgage if your home is in negative equity, as it increases risk. However, specialist lenders may consider it if:
Payments have always been made on time
The value drop is small (under 10%)
The borrower’s income and credit profile are strong
5. How Much Negative Equity Is “Too Much”?
Every lender sets internal thresholds. A small fall (for example, 5–8%) may be manageable. Larger drops (15% or more) often trigger stricter limits or short-term renewals rather than full remortgages.
6. Lender Acceptance Spectrum
The lender acceptance spectrum can be summarised as:
Conservative lenders: Will not lend above 90% LTV
Mainstream lenders: May allow 90–95% LTV for strong credit profiles
Specialist intermediary lenders: May review cases up to 100% LTV if payments are stable and the property remains saleable
7. Policy Exceptions and Mitigating Factors
Lenders sometimes show flexibility when strong compensating factors exist, such as:
Long employment history
High disposable income
Low unsecured debt
Positive credit behaviour over several years
8. Product Transfer vs Full Remortgage
If you’re in negative equity, your current lender may still offer a product transfer, a new rate without a full remortgage. This avoids new underwriting or valuation costs and is often the most practical short-term solution until the property’s value recovers.
9. Options if Your House Value Has Dropped
Stay with current lender via product transfer
Reduce balance with extra payments
Extend mortgage term to ease affordability
Seek a specialist remortgage (intermediary lenders)
Consider secured loan if you need additional funds
Wait and revalue after market recovery
10. Case Study: Remortgaging in a Down Market
A couple in Somerset bought a property for £260,000 in 2021 with a 10% deposit. By 2025, the home was valued at £240,000, leaving them at 96% LTV. Their initial lender declined a remortgage, but a broker secured a product transfer at a slightly higher rate, preserving payment stability. After one year of repayments and a mild value recovery, they successfully remortgaged to a lower-rate deal.
11. How Brokers Help in Falling-Value Cases
Brokers understand which lenders have flexible remortgage policies and can negotiate directly with underwriters. They also:
Compare LTV thresholds across lenders
Help prepare accurate valuation evidence
Identify when to re-apply for better deals later
At Manor Mortgages, we’ve guided hundreds of clients through these scenarios, ensuring they don’t lose access to fair mortgage terms.
12. What Underwriters and Valuers Assess
Current property condition and saleability
Recent market comparables
Borrower payment history
Loan-to-value post-valuation
Employment and income stability
13. Market Trends: What’s Changed in 2025
Average UK house prices fell around 2–3% year-on-year (ONS, April 2025).
Lenders remain cautious but are offering longer-term fixes for stability.
Equity-rich homeowners increasingly use product transfers over remortgages.
14. Common Mistakes to Avoid
Ignoring valuation issues until late in the process
Applying to multiple lenders and damaging credit score
Overestimating property value for affordability calculations
Assuming product transfers are automatically worse value as they often aren’t
15. Expert Tips for Improving Approval Chances
Order an early valuation to manage expectations
Reduce unsecured debts before applying
Keep mortgage payments consistent for at least 6–12 months
Avoid new credit commitments leading up to remortgage review
Use a broker for targeted lender matching
16. FAQs
Q: Can I switch lenders if my value has dropped?
Possibly, but most likely through a specialist lender.
Q: Is it worth remortgaging in negative equity?
Sometimes yes, if you can secure a better rate or avoid reverting to a higher SVR.
Q: Will my credit score affect the outcome?
Yes, strong credit can offset reduced equity.
Q: Should I wait for prices to recover?
If possible yes, but product transfers or partial repayments can help in the meantime.
17. Glossary of Key Terms
Negative Equity: When your mortgage exceeds property value.
Product Transfer: New deal with existing lender, without full remortgage.
Loan-to-Value (LTV): The ratio of mortgage amount to property value.
18. Reader’s Checklist: Questions to Ask
What’s my current property valuation?
What’s my estimated LTV?
Does my lender offer product transfers?
Could a specialist lender consider my case?
Should I reduce my balance before applying?
19. Conclusion & Next Steps
You can often remortgage even if your home’s value has dropped, but your strategy depends on equity level, income, and lender flexibility. While mainstream banks may hesitate, intermediary lenders and broker-negotiated options can provide solutions. The key is not to panic, but to act early, get accurate valuations, and review your lender’s policies.
At Manor Mortgages, we have decades of experience helping clients remortgage in changing market conditions. Whether you’re in mild negative equity or simply unsure of your next step, our team can help you explore the right route.
Get in touch today on 01275 399299.
Written by Ben Stephenson, CeMAP-qualified Mortgage Broker. Reviewed by Mortgage Experts.
Manor Mortgages is FCA authorised (496907) and has been supporting homeowners for nearly 30 years. Based in Bristol with a 4.9-star Google rating, we help clients nationwide secure, review, and remortgage the right way.