Once you’ve finally secured your mortgage, you probably want to switch your focus to moving into your new house and getting to work on making those repayments.
However, did you know that you could actually potentially save thousands of pounds by switching your mortgage mid-term?
It’s not right for everyone but if you shop around you just might be able to bag yourself a better deal.
When should I think about switching?
It’s always worth keeping an eye out for new mortgage deals as there are always new deals coming onto the market.
While it can be hard to keep abreast of the market if you’re not actively looking to switch, we recommend you do review your mortgage at least once a year and also whenever interest rates change.
When can I change my mortgage?
You can actually change your mortgage deal at any point after you agree to it, although there may be a charge for doing so. There are also many other costs that you could incur, so make sure that you bear these in mind when comparing deals and don’t get sucked in by a great interest rate.
What costs are there?
- Product fees: This is just a basic fee for your mortgage which will either be a set amount or a percentage of the amount you’re borrowing.
- Legal and valuation fees: These cover all of your solicitor’s costs including conveyancing, arranging valuation surveys and transfer of funds.
- Early payment charge: When you switch to a new provider you’re essentially paying off your current mortgage early, so you may have to pay an early payment (or redemption) charge.
Make sure that you weigh up all of the costs of switching your mortgage before doing so, as it could wind up costing you more than it saves!
Finding a new deal
Firstly, you should ask for current mortgage provider for a quote which will explain how much it would cost to pay off your entire mortgage and any applicable fees as this is the amount that you will need to be able to borrow from the new lender.
As always we recommend that you shop around for the best deal. Have a think about whether you want to stick with your current type of mortgage or perhaps could benefit from switching to a new one, whether it be fixed rate, trackers or discounted.
Of course, the main things you’ll need to check are the interest rate and any of the hidden costs mentioned earlier as these could well wipe out any potential savings you’re making.
The best way to compare all of the mortgages out there (and there are a lot!) is to come to a mortgage broker such as ourselves as we can search the whole of the market to help you find the deal for you.
Feel free to get in touch with one of our expert advisors online or 0800 756 7794.
Once you have found a deal that you’re satisfied with you will need to go through the application process for your new mortgage like you normally would.
Once your application has (hopefully) been approved, you will need to hire a solicitor to handle the switch from your current to your new lender including organising valuations, transfer of deeds and funds and arranging a switchover date.
Do bear in mind that since April 2014, mortgage rules have become a lot stricter and the process may take a bit longer than you’re used to as you’ll have to provide bank statements or business accounts to prove your earnings.