Updated: May 3
Your mortgage is likely to be your biggest monthly outgoing so it’s important not to pay more for it than you absolutely have to. While you may have chosen carefully when taking out your initial deal, it is important to review your mortgage on a regular basis to ensure it remains competitive.
Most people remortgage every time their existing deal comes to an end. So, if you have taken out a two-year fixed-rate mortgage, for example, that means shopping around just before you come to the end of that deal and choosing another rate to remortgage onto. If you don’t, your mortgage will simply revert to your lender’s standard variable rate (SVR), which is usually much higher than than your fixed rate.
When it comes to remortgaging, you can stick with your existing lender, either on the SVR or another deal they offer you – known as a product transfer. Or you can take your mortgage to another lender, which is known as remortgaging. Whichever you opt for, you must compare what you are offered with what else is on the market to ensure you are getting the best deal for your circumstances. Many people assume that loyalty pays and that their existing lender will offer them the best deal, particularly if they have been with them for a while but this isn’t necessarily the case. Some lenders offer the same rates to new customers as they do to their existing ones; some offer a slight discount to existing customers; but others offer better rates to new customers in order to attract more business.
Remortgaging using a broker
This is where a mortgage broker such as home-me can help. Your existing lender will usually get in touch with you a few months before your mortgage deal comes to an end, setting out the options available to you. At this point, it is worth chatting to a whole-of-market broker such as home-me to see whether we can find a better deal. It may be that sticking with your existing lender is the best option, and if so, we can confirm that. It ensures you get peace of mind, knowing that you have the best deal and there isn’t a better one out there for you to move onto.
A remortgage involves a full underwriting of the case which means the lender will go through all your finances, whereas a product transfer is usually more straightforward and requires less analysis. Depending on your circumstances, a product transfer may therefore be more suitable – again, we can provide impartial advice as to the best option for you.
Some borrowers have been stuck with their lender unable to move, perhaps because their income has fallen since they first took out the mortgage or the loan-to-value has increased so they can’t shop around for a competitive deal. If you are in this position, it is still worth seeking advice because there might be a solution.