There are a number of reasons why you may want to move your mortgage from one lender to another – and understanding these can help you decide if it’s the right time.
5 reasons you may look to remortgage:
When your existing mortgage rate ends, you’ll usually move onto your lender’s standard variable rate (SVR). This can be more expensive than your current rate so your monthly mortgage payments may increase.
To avoid paying more, you could switch mortgage rates with your current lender or remortgage to a new lender in readiness for when your current mortgage rate finishes. It’s a good idea to start researching your options at least 6 months beforehand so your new deal or mortgage can start as your current one ends.
You may find a lower rate that could reduce your monthly payments, meaning you could pay less interest over the term of your mortgage. A better deal for you could also mean finding one that allows you to overpay or change your mortgage term.
There may also be other reasons to change your mortgage that are specific to you. You can speak to a mortgage advisor if you need help or support.
Keep in mind, if you remortgage before your current deal ends you may have to pay an early repayment charge (ERC) and other fees. If you decide to do this, make sure any potential savings outweigh the potential charges. Alternatively, you can avoid these fees by waiting until your current deal ends before remortgaging.
If you’re not satisfied with your current lender, you may consider remortgaging to a new provider. For example, you may want:
It’s important to be happy with your mortgage provider. However, you’ll need to think carefully about when you move to a new lender, as there may be fees or charges to pay if you leave before your current mortgage rate ends.
You may want to borrow extra money against your home. This could be for many reasons, such as wanting to carry out home improvements or fund further education. If your current lender is unable to increase the amount you want to borrow or offer you the deal you want, you can speak to another lender to see if they can help.
Keep in mind – your payments could increase if you borrow more, so you need to be sure you can afford them.
If the value of your home has gone up, you could benefit from a lower loan-to-value (LTV) ratio. The LTV is your outstanding mortgage amount in relation to the value of the property, shown as a percentage.
Having a lower LTV could mean you are eligible for lower rates. You can contact your lender to find out what your LTV ratio currently is and, if it has changed, what new interest rate options are available to you. If your current lender is not able to offer a deal you want, you can then see what other lenders can provide.
Remortgaging is not suitable for everyone and it may not be the right time for you. Here are some reasons why you might hold off remortgaging.
You need to think carefully about remortgaging and consider all costs before deciding if remortgaging is financially worthwhile for you. For example, if you need to pay a large early repayment fee to leave your current deal, it may be worth waiting until your existing mortgage rate comes to an end.
When remortgaging, your new lender will need to see proof of earnings and complete a full credit check to make sure you can afford the payments. Lenders are more likely to offer you a mortgage if they can see you’re reliable at borrowing and repaying money.
If you’ve had credit problems, such as missed payments, since taking out your last mortgage, it can show up on your credit file and lower your credit score. You may want to wait and improve your credit score before applying.
It’s possible your financial situation may have changed since you took out your current mortgage. For example, you may be in between jobs, which can affect whether or not your application is accepted.
Given the unique situations that many people are in, there have been some changes to how affordability is being assessed by mortgage providers. It’s important that, if your income has recently changed or you think it’s likely to change in the future, you include this in your application.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.