Remortgaging can give you a better interest rate, more flexible mortgage conditions and a chance to borrow more money if the need arises. Can you remortgage with the same bank?
When your initial period (the offer introducing a lower interest rate that you receive after the mortgage has begun) comes to an end, it is always worth checking to see if you can get on another initial contract.
This new agreement may still apply to your current lender – this is called “product transfer”. Or maybe with a new lender. You have zero obligation to stay with your current lender.
Reasons to stay with your current lender
Your lender has (probably) confidence
Although you were approved for your existing mortgage, it was probably a few years ago, so a new potential lender is not guaranteed to be approved again because they will have to carry out a credit check. If your financial condition has worsened (from dismissal to being late with payments), you may not be approved for a new mortgage with a new lender. Or, maybe you are earning less now than when you took out an existing mortgage, which makes it difficult to pass the test for the availability of a new potential lender.
You can avoid paying many significant fees
If you stay with the same lender, there will usually be no exit fee because you don’t change to a new lender. You can also avoid any new legal fees or valuations because you are not buying a new property.
You will probably save time
Once you realize the potential benefits of remortaging, you’ll probably want to do it as soon as possible. If you stay with the current lender, this can be a relatively quick process, but if you change to a new lender, it may take some time because you may need to check your creditworthiness, check availability and wait for various formalities along with real estate valuation.
Check the costs
- Be sure to check the costs before changing.
- Some lenders may offer free offers to tempt you, but if you don’t, you will have to pay legal costs, quotes and administrative costs.
- You can use the annual interest rate (APRC) to help compare offers.
- APRC is a way of calculating interest rates that takes into account some mortgage related fees, allowing you to compare mortgage offers.
- What might look like a money-saving offer may end up losing money if you don’t make your sums first.
Should you use a broker during remortgregation?
When looking for a mortgage, you can try to find your own offer by shopping with different lenders.
Alternatively, you can talk to a mortgage broker from around the market who can explore the options available – and, in many cases, talk to your current lender on your behalf.