You should start to look to remortgage three to four months before your introductory rate is due to expire form your existing lender. Almost every mortgage has an initial rate that lasts for the first two to five years of your loan, but this term can be longer, shorter, or somewhere in between.
When the deal expires, the interest rate will return to the lender’s standard variable rate (SVR), which will almost always be higher than the rate you were paying previously.
These headline introductory offers are also included in remortgaging packages to entice consumers to move from their current provider. As a result, remortgaging will theoretically save you hundreds of pounds per month in interest for the next two to five years but it does depend on your current circumstances.
When and why should you remortgage?
Several factors can influence when and why you should remortgage. You can begin searching for a remortgage three months before the existing one expires. This will allow you enough time to conduct research and complete the application process to ensure that your remortgage deal starts the day after your previous one finishes. The reason it is the day after is because your early repayment Charges (if you have any) finish on a specific date so it is the day after the expiry of the ERC when you need to “complete” on your new mortgage because you will no longer have any Early Repayment Charges.
If you already have a fixed-rate mortgage, you’ll want to ensure that your lender’s standard variable rate won’t be a shock when your monthly payment increases.
If you’re on a discounted variable rate and interest rates have risen sharply, you won’t be surprised because your rate has risen as well. However, you’ll most likely want to switch to a fixed rate.
Remortgaging allows you to keep paying your mortgage at the introductory rate on a new mortgage plan for a longer period of time. Millions of people remortgage every year to benefit from lower interest rates either from their own lender or by moving to another mortgage lender.
How long will it take to remortgage?
It can take two to three months to remortgage to a new lender. If you’re transitioning from one mortgage lender to another, the process could be completed in as little as one month.
As a result, you can begin comparing and researching at least three months before your current contract expires. Allow yourself time to consider your choices and total the costs.
Remember that many of the fees you had to pay when you first got your mortgage will be repeated when you remortgage. You could also be charged early repayment charges if you pay off your old mortgage too early.
We can guide you through this process, so you know what’s happening and what deal you are getting and whether its worthwhile doing it now.
Should you remortgage before your current deal ends?
Depending what rate, you are on with your current lender, determines whether you have any Early Repayment Charges. If you are still tied into your current deal, it may not be financially worthwhile Remortgaging until the current rate expires. Mortgage lenders want to entice you with low introductory rates.
Check the terms and conditions of paying off and exiting your mortgage early.
You can schedule the remortgage process so that the new mortgage starts as your old rate and Early Repayment Charges finish.
Is remortgaging worth it?
You could save thousands of pounds by remortgaging. Simply decreasing your mortgage interest rate by 1 or 2 percentage points could result in you paying hundreds of pounds less per month.
Since the bank rate can be volatile, remortgaging to a new fixed-rate or reduced offer can provide some protection.
Get in touch with of our mortgage saving experts today.
Switching mortgage: comparing rates and fees
In general, you should always start by comparing interest rates. Discounts on payments are appealing, but because mortgages are long-term commitments, the savings can take some time to realise.
However, any new deal you want is likely to be for a limited time, so the costs of remortgaging should be carefully considered. Mortgage rates can change on a daily basis so if you find a deal you think is great then don’t wait too long before you apply because it could be withdrawn by the lender when you come to apply.
Compare the fees over the initial rate period to see how much they can affect your future savings.
If the monthly mortgage repayments over the introductory period plus the arrangement and any other fees you have to pay to set up the mortgage are still working out cheaper than your current lenders variable rate or other deal, they may offer then it makes sense for you to apply to remortgage with that lender.
When is it a good time to fix a mortgage rate?
If you believe the bank of England base rate or the variable rate you are on is going to increase, now is a good time to move to a fixed-rate mortgage, but only if its financially viable to do so. Remember make sure you are not charged any Early Repayment Charges. If you are then you can change to a fixed rate if you are happy to repay these penalties or you may feel like you want to wait until the Early Repayment Charges have ended before making the switch to a fixed rate mortgage.
The standard variable rate offered by your lender is likely to be higher than a fixed rate offered by another lender.
Should I remortgage with the same lender or switch?
Remortgaging every few years is usually a good idea to make sure you’re getting the best price. However, if interest rates increase in two years, then you could be paying more in comparison to you choosing a five-year fixed. Remortgaging every few years can save you tens of thousands of pounds over the term of your mortgage.
What are the advantages of remortgaging with the same lender?
Here are the main reasons why you might choose to remortgage with your current lender:
1. You could save money (at least initially)
If your current lender offers a cheaper overall deal than other lenders, then stay where you are and just switch the rate. If you do not change the term of the mortgage or the repayment type from repayment to Interest Only, then the lender will not need to see any paperwork from you such as payslips or bank statements. If you just change the interest rate when it is up for renewal, then the lender does not need to see any paperwork from you because they have assessed your ability to afford the mortgage when you applied for the mortgage previously. You do not need to pay a valuation fee or hire a solicitor if you stay with the same lender, so you’ll save money on those expenses. In fairness in most cases even if you do decide to go to a different lender, they will not charge you any fees for using their own solicitors to do the remortgage nor will they charge you any valuation fees, but this is not in all cases and depends on your circumstances whether you get these things or not.
Additionally, if you remortgage before your current deal finishes, your current lender can waive any early repayment penalties (ERCs).
Sometimes you may be charged an arrangement fee, but it depends what rate or “product” you choose.
2. You could save time
Since your new lender has already lent you the money the process is simpler because you do not have to provide proof of income nor get a solicitor to do the legal paperwork so the rate switch can go through quicker. A complete remortgage with a new lender can take months, but it can take as little as a few days with your current lender. However, if you request a larger loan (a Further advance), the lender will need to conduct further reviews, which will take as long as a remortgage application in most instances.
3. It may be easier
Your lender would likely not need to run a credit check on you because they already have first-hand knowledge of your ability to repay loans (unless you’ve skipped payments in the past). Your current lender may not be able to offer you a new interest rate if you are currently in arrears on your mortgage.
What are the benefits of remortgaging with a new provider?
In some cases, switching to a different lender is better in the long run. Here are some of the most compelling reasons to make a move.
You could save money
By checking around, you might be able to get a better mortgage rate. Furthermore, if you work with a mortgage broker, they may be able to find you at a much better price than your current lender would. Also. if your broker is “Whole of Market” or “Independent” then they will be able to search the whole market for you and save you time and potentially a lot of money. Additional deals, such as free legal fees and cashback, may be available. This is especially important to remember if your financial situation has changed since your first mortgage application, as you might have a lot more choices now. It’s best to speak with a mortgage broker who will help you find the best remortgage deal and evaluate your current situation to see whether remortgaging will save you money.
2. You could get better terms
If you use a mortgage broker, they will take all of your circumstances and goals into consideration so that your offer is right for you in every way – not just the interest rate – and remortgaging in the future would be much simpler.
3. You may get a more up-to-date valuation
Your current lender’s valuation would most likely be based on them sending out a RICS qualified surveyor to assess the value of your home. This could result in a lower Loan to Value (LTV) and lower mortgage rates. It’s crucial to think about if you’ve recently had work done or if your street has become more attractive in recent years.
Do I need a solicitor to remortgage with the same lender?
Officially you do not “remortgage” with the same lender you do a “rate switch” or “product transfer”. These are the technical terms for this. You will not need to get a solicitor involved in this situation.
Which is cheaper – same lender or new lender remortgaging?
It This depends on the deals offered by your current lender in comparison to other lenders. Your current lender may have a lower interest rate but may charge much higher arrangement fees to set the mortgage up therefore may be more expensive overall in comparison to another lender.
Speaking with a mortgage broker first is always a good idea. A broker is unlikely to charge you anything to determine your situation and will assist you in weighing the benefits and drawbacks of staying with your current lender or switching to a new one. Learn about the costs associated with using a mortgage broker.
Compare remortgaging mortgages
Compare mortgages for homeowners thinking about getting a new mortgage.