Re-mortgages

Are you getting a good deal?

If you move home, you'll probably shop around to find a competitive mortgage. Even if you are not moving, there is no reason to stick with a poor deal.

Questions to ask yourself

Q Are you still on a special deal or are you now paying the lender's standard variable rate?

If you are still on a good deal then make a note of when this finishes and remember to review it again closer to this time.

Q Would you have to pay an early repayment charge to switch?

It may not be worthwhile switching yet depending on how much the charge is. If this is the case, make a note of the date that the early repayment charge will no longer be payable (from your annual statement) and review it again closer to the time.

Q Are you paying the lender's standard variable rate and there are no early repayment charges?

You should definitely review the products in the market and see if you can save money by switching to a new deal. Use the information in your annual statement, to compare your mortgage with other mortgages available both from your current lender, and from other lenders. Use the information in your statement such as the amount you owe, the term remaining, the interest rate and monthly payment to shop around.

Get a key facts illustration (KFI) for mortgages that you are interested in and check that you will save money by switching.

Switching your mortgage

Gone are the days when you took out a mortgage and kept the same one for 25 years. Nowadays, it’s common to shop around every few years to make sure you are getting a good deal.

Switching can cut your monthly payments. But you’ll need to weigh up these monthly savings or other benefits against the up-front costs of making the switch. The main factors to consider are set out below.

Make sure you recoup the costs of switching over a period which is less than any special deal – for example, over less than two years if you switch to a two-year discounted rate.

Which type of deal do you want?

Do you want a special interest rate deal or, say, a mortgage with flexible features?

Mortgage Features

Do you want a repayment or an interest-only loan or a combination of both? You don’t have to stick with the same repayment method. If you are switching from an interest-only to a repayment mortgage, you do not have to stop or cash in any associated savings scheme.

Which repayment method?

Switching can be an opportunity to borrow extra money, especially if the value of your home has increased since you took out your existing mortgage. But don’t borrow more than you can afford to pay back. Don't forget that you may be saving money now which means you can afford the new payment, but this payment could still go up in future unless you take a long-term fixed rate.

When switching your mortgage, this can also be a good opportunity to pay off some of your mortgage and borrow less.

How much can I afford?

What will it cost you?

Especially in the early years, your mortgage might have early repayment charges. These can be hefty if you are still in the period of a special deal, such as a fixed, discounted or cashback mortgage.

Even if there are no early repayment charges, your lender might make an administration charge and if you are switching to a new lender, your home will have to be valued and there will be legal costs to pay. With some mortgage deals, the lender will pay these fees for you.

What are the fees and costs?

Also, if you are switching lender, check whether they will charge you interest to the end of the month even if you pay off the mortgage earlier. In this case, make sure you switch your mortgage at the end of the month.

Remember that if a deal has no fees the rate might not be as good as one that charges fees.

Always ask for a KFI for mortgages you are considering and compare the different deals to work out which is best for your circumstances. Remember, when you’ve found a good deal, it’s worth going back to your existing lender to see if it will offer you a similar deal to keep you as a customer.