Remortgaging allows you to make sure you always have the best mortgage product available for your current personal circumstances. Although you don’t have to remortgage, it’s always worth exploring your options when the opportunity arises to see what deals are out there. You might find a more suitable mortgage product with an alternative lender, or you may be able to simply switch to a better deal with your current lender.
Remortgaging might give you a better interest rate, more flexible mortgage terms, and/or a chance to borrow more money if you need to. When remortgaging, there could be advantages to staying with the same lender, as well as some advantages to moving to a new one. It’s important to weigh up all of the factors before making your decision.
Should I remortgage with the same lender?
It is possible to remortgage with your current lender, although this is usually referred to as a ‘product transfer’. A product transfer is not normally considered to be new lending (unless you take the opportunity to borrow an additional amount), whereas remortgaging with a different lender would be. This means the process can be slightly different.
The advantages of remortgaging with the same lender are:
- There are generally less fees to pay as you are able to avoid legal costs and valuation fees. Your current lender will do an internal index linked valuation of your property to give an approximate value of your home at the current time. Depending on the new valuation, the lender will give you a choice of products to choose from. This could be at a new loan to value threshold, due to changes in the market and equity built up.
- As you are not purchasing a new property, your current lender ought to have your details to hand from your original application, so the application process should be simpler. It is just a simple swap of mortgage products.
- If your situation has changed since taking out your last mortgage an existing relationship with the lender could work in your favour if, for example, your financial situation has changed (perhaps you have changed your job and you now earn less money). Your current lender won’t ask for wage slips or any documentation – all they will do is ensure you have kept up with your mortgage payments and check that you aren’t in arrears.
- It’s generally faster, although remortgaging is never something to rush. A simple product transfer could be processed in 30 minutes, whereas remortgaging with a new lender generally takes a minimum of 4-6 weeks due to credit checks, an affordability check, the property valuation and legal work.
The disadvantages of remortgaging with the same lender are:
- You might not get the best deal available. Limiting yourself to just one lender means you may potentially be missing out on better deals available out there in the mortgage market from other lenders. We’d always recommend at least shopping around to see what else is out there – something that a mortgage broker such as Mortgage Light can handle for you.
- You may receive biased advice. Your lender may encourage you to stick with them because they don’t want to lose your business, which might leave you feeling confused.
How about remortgaging with a new lender?
You are never obliged to stick with the same lender throughout the course of your mortgage. It’s not a one-time purchase. Many people will swap to a handful of different lenders over the years in order to secure the best deals.
The advantages of remortgaging with a new lender are:
- You will have access to a lot more deals. Your current lender’s deals are only a tiny fraction of the overall mortgage market. Swapping lenders might not be as straightforward as sticking to the same one but it can certainly be a better move financially if you find the right deal. If shopping around seems daunting, we can help you find the best option for your circumstances.
- Switching lenders sometimes comes with a perk or two, such as cashback, a free valuation or free legal fees. A new lender will often use incentives to attract new customers, such as introductory offers. Your current lender probably won’t offer the same sorts of incentives in order to keep you.
- A valuation will be carried out on your property. Even though there is usually a fee involved with this, a valuation can be a positive for you, because you might find you now have a better Loan to Value (LTV) ratio than when you last checked. Generally speaking, the lower the percentage LTV, the better the mortgage rates you will be offered.
The disadvantages of remortgaging with a new lender are:
- There will be fees involved. When switching mortgage lenders, you may need to pay an exit fee to your current lender. You will need a solicitor specialising in conveyancing (property law) to produce the legal paperwork needed, which will incur legal fees. You will almost certainly need a new valuation of your property which you will usually have to pay for. However there are mortgage products that will offer these facilities free of charge. And, if you are in a fixed rate agreement with your current lender and you leave before the fixed term ends, you may also need to pay an early repayment charge.
- It’s more time consuming, as you will have to submit a new application and start the remortgaging process from scratch. A new lender will have to carry out all of their usual affordability checks and assess your financial situation before making an offer.
Why use a mortgage advisor or broker?
So, should you consider a remortgage with your current lender, or would you be better off looking for a new deal with an alternative lender? This is the question that we at Mortgage Light will be able to help you answer.
As independent mortgage brokers, we have access to the whole of the financial market and can access deals that a consumer might ordinarily not see. This expands your horizons when searching for your perfect mortgage product. After assessing your circumstances, we will only show you the deals which we think will work for you, saving you both time and energy and possibly avoiding confusion and a string of rejected applications.
We are also here to offer as much independent advice as you need. We’re completely unbiased and our focus is on what’s going to work best for you and no one else. Your mortgage is likely to be one of your biggest household expenses, so it’s important to make it work for you. Get in touch with our team of experts at Mortgage Light for impartial advice and guidance on remortgaging.