Switching Mortgages – What You Need to Know

switching mortgages for a better interest rate mum holding daughter wrapped with towel

Switching Mortgages – as soon as a fixed or tracker mortgage deal comes to an end, you will automatically move onto your lender’s Standard Variable Rate (SVR). If this doesn’t meet your needs, switching lenders could be worth looking into.

Switching mortgage lenders without incurring early repayment charges (ERCs) requires a complete remortgage process involving valuation, legal work and conveyancing fees – this may incur extra expenses as part of this transition process.

Choosing a new lender

If your fixed rate, discount or tracker mortgage deal is coming to an end soon, switching providers might be in your best interests. By staying put with one lender, they could default you into their standard variable rate (SVR), which could be significantly higher than market offers.

apply for cash loans 24/7

Start looking for your new mortgage deal three to six months before your current one comes due, as some lenders charge early repayment charges (ERCs), which could significantly diminish any savings that result from switching. Also take advantage of mortgage broker services. Their access to all lenders and offerings allows them to search out the best possible deals for you.

Note, however, that any lender conducting affordability and credit checks may find it more challenging to switch mortgage lenders if your financial circumstances have altered since taking out your first one.

Valuation and legal work

Staying with your current lender may be quicker than switching, since they already possess most of the details regarding your property. Although fees still apply, these might be less than what would be involved if remortgaging to another lender. As the process can take some time to complete itself, ideally begin searching for new deals six months before your existing one expires.

Applying for a remortgage when switching mortgages

Switching mortgage providers requires going through similar checks as when taking out a new home loan loan. Lenders will conduct affordability and credit checks, arrange an appraisal valuation and carry out legal work, which usually takes four to eight weeks to complete. Remortgaging may prove more challenging if your financial circumstances have altered since taking out your initial mortgage – new lenders may be warier of lending to people whose income has decreased or who have issues with debt that show up on their credit file.

As soon as your current deal expires, it is wise to begin searching for deals at least six months in advance. This gives you plenty of time to complete the process and avoid being moved onto a lender’s standard variable rate (SVR), while giving access to more mortgage deals that may offer lower rates and cashback incentives.

Taking out a new deal

Switching mortgages is a huge decision that should always be approached with caution and guided by expert guidance from an adviser. A good advisor will walk you through all of the advantages and disadvantages, helping you make an informed decision. Switching lenders usually involves reapplying for your mortgage, gathering all relevant documents, getting it valued, hiring solicitors to carry out conveyancing work as well as possibly lower interest rates by avoiding going onto their SVR list – however it might also mean lower monthly repayment costs as well.

Researching potential lenders a few months before your current deal ends is wise; most will provide initial rates from various variable and fixed terms over a range of durations, as well as early repayment charges (ERCs or early termination fees) which might apply.

Scroll to Top