Correct at 31/12/2023
Remortgaging is when you change your existing mortgage to a new deal, without moving home. You can remortgage with the same lender or switch to a new one. Shopping around for different providers can be a very good idea, opening up opportunities to save money on a better deal than your existing lender might be able to provide, but staying with your existing lender can sometimes be an easier process.
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Most people would like to keep their monthly mortgage costs to a minimum. One way to approach this is to remortgage with the same lender Previously, when borrowers wanted to remortgage, lenders would often only offer limited products to their existing customers which tended to be more expensive than other options. They now typically provide a much wider range of choice 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 advantages of remortgaging with the same lender, as well as the disadvantages and why you should consider talking through your options with a broker first, like L&C.
If you want to remortgage with the your existing lender, the process can, be more straightforward than remortgaging with a new provider - due to less admin. Some of the advantages include:
A credit check may not be required
Since your lender will have already been through the initial 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. For example, when you remortgage with the same lender, a credit check may not be necessary if you aren’t looking to borrow any extra funds or change anything on the mortgage except for the deal.
You might not need a formal valuation
Another potential benefit of sticking with your existing lender is that typically a formal valuation may not be required - your lender should be able to carry out an automated valuation using industry data.
However, there are a few points to bear in mind:
Firstly, if you want to borrow more or need to change other terms of your mortgage, 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 if you’d moved to a different lender, and there are no guarantees that you’ll meet your existing lender’s current criteria.
It’s also important to remember 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 only focusing on the headline rate so you can be certain you’ve found the best possible deal.
If you’re thinking about remortgaging and wondering whether to remortgage your home with the same lender or find a new provider, it’s a good idea to consider some of the benefits that come with a better remortgage deal. Looking out for the right deal can help guide who you choose to remortgage with.
You might want to look out for the following when considering deals:
Finding a lower interest rate than SVR
Once your current deal ends, you’ll likely be put on your lenders SVR, which is often higher than the deals that you might be able to switch to. By remortgaging with the right lender, you could find a lower interest rate.
Taking advantage of a lower LTV
If your property has increased in value since you began your mortgage, a lower Loan to Value (LTV) might help you secure a better interest rate when you remortgage. The more equity you have in your property, the lower your LTV will be, meaning you could get a better deal with the right provider.
You want to offset your savings or overpay
If you want to offset your savings against your mortgage or overpay but your current provider won’t allow it, you might want to remortgage with a lender who won’t penalise you for overpaying. You can read more about offset mortgages in our guide.
If you want access to some of your equity, perhaps to carry out home improvements, remortgaging is an option. However, by increasing your mortgage your LTV will change and your monthly payments are likely to go up. Choosing a lender with a competitive rate could help keep your monthly payments manageable. You can check your new LTV with our handy calculator.
Whether you’re thinking about switching to a new kind of deal, remortgaging to free up equity, wondering whether to stay with your current lender or hoping to switch, L&C can help with all the advice and guidance you need to make the right decision. Contact us today and speak to one of our experts.
If you’re thinking about remortgaging your property, it’s advisable to plan ahead, take the necessary time to consider your decision, the available options, and get the right advice.
Here are some of the steps you’ll go through on the remortgaging journey:
Your current lender contacts you
If you’re on an introductory deal such as a two or five year fixed rate mortgage, your lender will normally contact you well in advance of the end date, so you’ll know when you’re due to switch to the Standard Variable Rate (SVR). Usually this will be between 3 and 6 months before your deal ends, and even if you’ve not heard from your lender this is still the time to investigate your best options for remortgaging.
Ask your lender for your closing balance
Your lender will give you a redemption statement if asked. This statement tells you the total amount on the remaining mortgage loan, including fees. This is the amount you’d need to borrow if you choose to remortgage.
Open yourself up to new opportunities and deals
Take the time to do your research and start searching for the right deal. There are a lot of products on the market and they can change on an almost daily basis, so using a broker like L&C can help speed up the search for the right deal for your needs.
Consider all the options
Think about whether you want a tracker or discounted rate that goes up and down as interest rates change, or if you would prefer to guarantee your monthly payments for a period of time by fixing your rate. It’s wise to consider monthly repayments, other fees, the term of your mortgage as well as any upcoming changes to your circumstances or income.
Find a mortgage broker
The easiest way to be sure of the best deal when you remortgage is to go through a mortgage broker like L&C. At L&C we search across the market to find the best deal for your circumstances, and we often have access to exclusive deals not available on the open market.
Submit your application
Remortgaging (whether you stay with your existing lender or switch) will usually also involve certain eligibility and affordability checks, so get your documents ready. Here’s where a mortgage broker can help too as they can guide you through the whole process and deal with the lender on your behalf
Conveyancing and Mortgage Offer
If you’re changing lenders, you’ll need a solicitor or conveyancer. They will sort out any paperwork needed in the legal process, for example drawing up and signing the mortgage deed and transferring the title of the property.
After carrying out all of the checks, the lender will then provide you with a mortgage offer. Your conveyancer will undertake all of the necessary legal work and take the process through to completion when your mortgage switches to your new lender.
Yes. When it comes to getting the best mortgage deal, shopping around is always worth considering. Deals offered by your current lender may be more expensive than deals offered by different providers, so while it may be easier to remortgage with your existing lender, it’s important 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 from a broker like L&C. Our advisers can assess 1000s of deals from 90 lenders across the market, so you get the best deal recommended for your circumstances – we’ll even check your current lender.
Advice is always important 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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