Guide To Switching Mortgage Provider

Many mortgage products have an initial period during which your interest rate is lower than for the rest of the term. After this initial period (usually 2 or 5 years), you will change onto the lender’s standard variable rate, which is often considerably higher than the rate during the initial period.

For this reason, you can often save money by switching to a new deal, even though this will incur fees. You may also be considering changing mortgage providers to release cash from your home, something we will explore in this article.

Reasons To Switch Mortgage Provider

• To avoid overpaying when your current deal ends: If the initial period of your current mortgage has ended, you will automatically move into the period where you are charged interest at the lender’s standard variable rate (usually more expensive). If your existing provider does not offer a competitive product transfer, then you may benefit from moving to a new lender.
• To get a better deal from a new lender: Even if your initial period hasn’t ended, it’s possible that switching to a new deal can save you money, even after fees are taken into account. You will need to consider any ERCs (early repayment charges) and the remortgaging costs. This can be especially true if interest rates have dropped significantly
• To benefit from a reduced loan-to-value ratio: You may have access to better interest rates due to a lower loan-to-value ratio. This can be due to the value of your property increasing or due to the impact of your monthly mortgage repayments.
• To release cash from your property: If you are interested in releasing cash from your property (such as for home improvements), then switching to a new deal can enable this.
• You want to overpay on your mortgage: If your current deal comes with punitive overpayment terms, switching to a new deal could allow you to increase your repayments without being penalised.

If any of these circumstances apply to you and you would like a free, no-obligation consultation with us to understand your options, submit an enquiry.

Reasons To Stick With Your Existing Lender

• Your existing lender is offering a competitive product transfer deal. You should always explore mortgage options with your existing lender, as they may be able to switch you to a new deal (a product transfer). This is usually easier to arrange and with reduced fees. This needs to be balanced against the financial benefits of switching to a new lender.
• You have a small mortgage balance: When your remaining balance is small, the savings you gain from a reduced interest rate/better deal can be lower than the costs of remortgaging.
• Your property value is likely to have fallen materially. This could mean your loan-to-value ratio has increased, making it difficult to get a better deal than you have with your existing lender.
• Your personal financial situation has deteriorated: A decline in your credit score or other personal circumstances (such as your income) could make it challenging to meet the requirements of a new lender.
• Your existing mortgage product has high exit fees: If you have not yet moved onto the SVR with your current lender, you are likely to incur early repayment charges. These may exceed any savings from switching providers.

Our mortgage advisors can help you weigh up the pros and cons of changing your mortgage provider.

How Long Does It Take and How Much Does It Cost?

The process of switching to a new mortgage provider typically takes 4-6 weeks, though it depends on your unique circumstances. Changing mortgage products with the same lender (a product transfer) is typically faster.

When you remortgage your home with a new provider, you may be charged an exit fee (called an early repayment charge) by your existing lender. It’s also likely you’ll incur fees for taking out a new mortgage. All of this needs to be considered before making a decision.

How Can A Mortgage Advisor Help You?

A mortgage advisor can review the terms of your existing mortgage and clearly explain to you any costs that would be involved in switching to a new provider. They will consult with you about your financial situation and the reasons you are considering a new mortgage. They can then search the entire market on your behalf and compare all the deals available to you, advising on which would be best.

Do I Need A Mortgage Advisor?

It’s certainly possible to remortgage without a mortgage advisor if you are confident in searching the market, comparing products with your current lender, and managing an application.

However, it’s important to note that not all mortgage brokers charge a fee. We offer a fee-free service that you may qualify for, and you can have a no-obligation chat with us about your circumstances.

Not all mortgage products are available without a broker, and failed applications can be time-consuming and damaging to your credit score.

Why Choose Online Mortgage Advisor?

Online Mortgage Advisor works with over 176 lenders with access to more than 13,050 mortgage products, including exclusive products that you can’t access directly, giving you access to some of the most competitive rates available.

• Whole-of-market access – Our advisors have access to a wide range of lenders and products.
• Specialist knowledge – Expert advisors for every type of mortgage situation
• Proven track record – Highly rated by our clients

Call 0330 818 7026 or make an enquiry to get started with Online Mortgage Advisor today.