Should I switch to a new mortgage deal with my existing lender?

Should I switch to a new mortgage deal with my existing lender?
Keeping mortgage costs to a minimum is likely to be a priority for most people during this difficult time and moving to a new deal with the same lender may be one way to reduce monthly payments.

Previously when borrowers came to the end of their mortgage deals, lenders would often only offer their standard variable rate (SVR), which tends to be more expensive than other deals. They now typically provide a much wider range of options to existing customers, although different lenders take different approaches.

Some, for example, offer the same products to existing customers as they offer to new customers, whilst others may have a totally separate range of mortgage deals specifically for existing borrowers. Sometimes rates on these deals are higher than those offered to new customers, although in some cases existing customers will be rewarded for their loyalty and rates may be lower.

Here are some of the pros and cons to consider if you’re thinking about moving to a different mortgage deal with your existing lender.

Pros of sticking with your current lender

Switching to a different mortgage deal with the same lender can be more straightforward than remortgaging to a new provider.

As your lender will have already been through the mortgage application process with you, they won’t necessarily require you to show them all the same information you provided when you first took out a mortgage, which can make things much simpler.

Another benefit of sticking with your existing lender is that typically a formal valuation won’t be required - your lender should be able to carry out an automated valuation using industry data. There also won’t be any legal work required, helping to keep costs down.

Downsides of staying put

Deals offered by your current lender may be more expensive than deals offered by different providers, so it’s vital to compare costs before you decide to stay put. If you’re not sure which is likely to be the most cost-effective option based on your individual circumstances, you should seek professional mortgage advice. An adviser can assess all the options for you so you get the full picture before helping you put the right choice in place, whether it’s a switch of deal with the current lender or to a new one.

If you want to borrow more or need to change your other mortgage terms, your lender will want to carry out a more thorough assessment, so they can be certain you’ll be able to afford your monthly payments. This means you may need to provide the same amount of paperwork as you would have if you’d moved to a different lender, and there are no guarantees that you’ll meet their current criteria.

It’s also important to bear in mind that if you are sticking with your existing lender, you may still have to pay an arrangement fee when you move to a new deal with them. You should therefore look at the total cost of any mortgage deal you’re considering rather than focusing on the headline rate so you can be certain you’ve found the best possible deal.

Again, advice is important here and L&C can help with finding the right option for you, so get in touch if you want to discuss which deals you’re likely to be eligible for.

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