When buying a property, most of us are in the same boat: we need a mortgage to give us a financial helping hand. Although these loans are usually paid back over the course of decades, you don't need to stay with the same provider for the whole term. If you spot a better deal, you can take the opportunity to move yours. With re-mortgaging on the riseacross the country, here's what you need to know about making the switch.
Why switch your mortgage?
There are lots of different types of mortgage available, and changing means you can find one that suits you better. British house prices are on the up, so your home is probably worth more today than when you bought it. This means you can swap to a lower 'loan-to-value' rate when you switch, giving you a more competitive deal.
Mortgage lenders are always competing with each other, too, so the deal you took out when you bought your home might not be as good as what's on the market today. Switching your mortgage could mean paying back less money each month, or paying it back even quicker.
The costs of switching
Switching your mortgage can save you a lot of money, but there are a few costs to watch out for. Your current provider might charge you an early repayment fee if you leave during the 'locked-in' period of your contract. Even if this charge doesn't apply to your mortgage, you might still need to pay an exit fee.
Your new lender might also charge you legal, valuation and arrangement fees, so it's a good idea to check these out before you choose a new mortgage.
When to review mortgage rates
Most of us wouldn't dream of renewing our insurance policy before having a quick check on a comparison site. You should treat your mortgage the same way. The best times to review your mortgage deals are:
- when Bank of England interest rates drop
- when your fixed or discount deal comes to an end
- once a year
If you're serious about switching, it's a good idea to chat to a mortgage adviser. They'll be able to tell you whether or not it’ll be worth it after the fees, and which deal to go for.