So how do you go about it? Here, we look at when you may want to switch and provide steps to help you get started.
You can switch mortgage rates anytime. However, people tend to look at their options for switching before their existing rate is due to finish. This helps them avoid any early repayment charges. If you decide not to switch rates before your existing rate is due to end, you may be moved onto your lender’s standard variable rate (SVR), which could mean you pay more each month.
Switching to a new mortgage rate is often simpler and quicker than remortgaging with another lender.
Remember you don’t have to switch mortgage rates on your own. If you’re unsure about what to do, your lender may be able to offer advice. They can help find the best option for you and provide support with the switching process.
If you prefer to switch mortgage rates yourself, here are the 3 key steps:
1. Find a new mortgage rate that suits you
When choosing a new mortgage rate, think about what’s important to you, such as:
a lower interest rate
an interest rate you can fix, so you know how much you’re paying each month
flexibility and the ability to make overpayments to help you pay your mortgage off faster
Here are some useful tools to help you choose a mortgage.
2. Switch mortgage rates
Switching is usually quite simple. Most banks and building societies allow you to switch online or over the phone (although you will not receive advice if you switch online and may not do so if you switch over the phone). As your current lender already has your details on file, a credit check is often not needed. No legal work is required either, so you won’t need a solicitor or licensed conveyancer.
You may want to shop around to understand how your current lender’s offers compare to those from other providers. It’s a good idea to do this a couple of months before you’re ready to switch.
3. Confirm your choice of mortgage rate
Before you switch, you’ll be given a new mortgage offer by your provider, containing all you need to know about the new rate and how to accept it. You should read this carefully.
There may be costs involved when switching mortgage rates. For example, if you’re planning on leaving a fixed-rate mortgage before the fixed-term ends, you may have to pay an early repayment charge (ERC). The details of any ERC payable will be in your original mortgage offer.
Some lenders can charge a product fee for switching to certain mortgage rates. But they should let you know if there are any fees or other costs, when you’re ready to switch rates.
Once you’ve decided which mortgage rate you’d like to switch to, it can be done relatively quickly. For example, at HSBC, some people are able to switch mortgage rates overnight.
The time it takes can vary between lenders and it can take longer for more complex cases.
Your home may be repossessed if you do not keep up repayments on your mortgage.