Are you on the lookout for a better interest rate on your mortgage? If the time has come to remortgage you may be tempted to stick with the same mortgage lender as you’ve been happy with their service so far, but are you putting yourself at risk of paying over the odds by doing so?
If you’ve been with your mortgage lender for years then you may be sat on their SVR (standard variable rate). This is basically the rate that all lenders will shift you onto as soon as your initial deal has expired – if you’re not in the habit of regularly reviewing your mortgage then you could be missing out on huge savings!
With interest rates set to rise further over the next year or so, it’s more important than ever to make sure you are getting the best deal on your mortgage and this can only be done by remortgaging. But does it make sense to remortgage with the same lender or take advantage of a better deal elsewhere?
So, should I stay or should I go?
There isn’t a definitive answer to this, as it will depend on all kinds of things, from what fees come with the mortgage to how healthy your credit rating is. But one thing you shouldn’t be swayed by is loyalty to your current lender. Unfortunately as many borrowers have found out to their dismay, staying loyal will not save you any money and could actually cost you more money. If you aren’t in a fixed-rate deal you are free to take your mortgage elsewhere but it’s up to you to work out whether it’ll be better to switch lenders or whether you’ll be better off staying put.
Here are a few pointers to consider:
STAY – Skip additional fees
Whilst you may be tempted to move by lower interest rates you’ll need to consider any additional fees you may incur by doing so. You may need to hire a conveyancer to organise the appropriate paperwork, your lender will require a new valuation to be done and if you are still in a fixed deal you may have to fork out some hefty exit fees.
You won’t be required to pay any of these fees if you stay with your current mortgage lender – it’s pretty much a no-fuss process to change to a new deal if you are staying put.
STAY – Save time
Depending on how much paperwork there is to complete and how quick a valuation can be done on your property, switching to a new mortgage lender can take anywhere from 4-12 weeks. Assuming there hasn’t been any major changes to your circumstances, a new deal can be done with your current lender in the blink of an eye.
STAY – You’re already a trusted borrower
A new lender doesn’t know anything about your borrowing record so they’ll be required to do a credit check before offering you a mortgage. If your circumstances have changed you may no longer be eligible for the affordability criteria which could make it difficult switching to another lender.
Your current mortgage lender does not have to do a credit check when switching you to a new deal – so if you’re worried that your credit rating may have taken a bashing this could go in your favour. However don’t rely on this – some lenders may still run a quick check on current customers.
SWITCH – Access to potentially cheaper deals
The products that your current lender has are only a tiny fraction of the mortgage market so even if you think you’ve got a great deal you’d be mad not to take a look at what else is around. If you feel a bit daunted by searching through hundreds of mortgages, then maybe consider using the services of a mortgage broker.
SWITCH – More flexibility
If you want to pay your mortgage off early but your current lender won’t authorise over-payments then a switch to a new provider could be just what you are looking for.
SWITCH – New customer incentives
The mortgage market is highly competitive and lenders are introducing incentive deals all the time to entice new customers. This could range from free conveyancing, zero fees or even some tempting cash-back offers. Be careful though – sometimes these new customer deals come with slightly higher interest rates than other ‘no-frills’ mortgages, so make sure you take the overall cost into consideration.
The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own and do not necessarily reflect the views of SO Media.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.