If you’re approaching the end of your mortgage deal, you might be wondering whether to remortgage to a new lender, or stick with your current lender.
Rising mortgage rates in recent months have made some homeowners nervous about moving to a new lender, but staying put and rolling onto your lender’s standard variable rate or revert rate could cost you more than switching. This is the rate homeowners typically move onto automatically once their mortgage deal ends.
More than half (55%) of homeowners will finish their current fixed deal and need to remortgage or go on to their lenders' standard variable rate (SVR) within the next three years, according to research carried out by comparison site Comparethemarket.com.
Although 71% of people plan to remortgage when their fixed rate finishes, 15% plan to stay put, meaning they will move onto their lender’s standard variable rate. Some fixed rate deals climbed higher than some lender SVRs, but this is changing as rate rises feed through to SVRs. Fixed rates have been improving in recent weeks and new deals can now be found that are much lower than SVRs.
Alex Hasty, director at Comparethemarket, said: “We understand it is an uncertain and difficult time for many homeowners, as SVR and fixed term rates rise, the number of mortgage products fluctuates, and the cost-of-living crisis deepens. Those soon coming to the end of their fixed rate deal are likely to face a big repayment shock, even if they’re remortgaging.
“For these homeowners, it is best practice to remortgage rather than switch onto your lender’s higher SVR. It’s important to compare mortgage products online – checking the available deals now and staying aware of what is happening in the market will help you to prepare your budget and save for the future.”
That said, it’s definitely worth checking what your existing lender can offer, as they may have competitive options. If you’re not sure whether to stick with your current lender, or to remortgage elsewhere, our online Mortgage Finder allows you to compare what’s available on the open market with the deals your existing lender can offer you, so you can get an accurate picture of the best option for you based on your individual circumstances.
If you’re not sure which mortgage to go for, get in touch with one of our advisers who can talk you through the choices available to you and help you find the best deal to suit your needs.
Should I stick with my current lender or switch to a new lender?