Have you ever thought about changing mortgage providers? If your current mortgage deal is coming to an end, you may be able to save money if you switch mortgage. When your mortgage deal finishes, you’ll usually be automatically moved onto your lender’s standard variable rate (SVR). This tends to be higher than the rate you’ve been paying, so it’s a good idea to start looking at switching mortgage lenders around 3 to 6 months before your current deal ends.
You may also be considering a mortgage rate switch if your current deal isn’t flexible enough for your circumstances. You may, for instance, want to overpay on your monthly repayments in order to pay off your debt sooner. You could find a mortgage switch offer which allows for this flexibility, although you should be aware that you may have to pay an Early Repayment Charge for leaving your current deal before the end of the agreed term.
Alternatively, you may wish to change to a different type of mortgage. If you want to rent out your home then you may be considering switching to a Buy to Let mortgage, or if you’re currently on an interest-only mortgage you may be looking at switching to a repayment mortgage.
Some people may choose to switch mortgage if the loan-to-value ratio of their home has decreased over time. This may happen if you’ve overpaid your mortgage, or if the value of your home has increased. Either way, you may be eligible for a more competitive mortgage rate which could save you money.
Switching mortgage process
How long it takes for a mortgage rate switch can depend on a number of factors, including whether you’re sticking with your current lender but just switching mortgage deals, or switching mortgage lenders entirely. It’s worth finding out when your current deal finishes and then start looking around for a new deal a few months in advance.
The first step is to speak to your current lender to see what they can offer you as a new mortgage deal.
If you’re happy to switch mortgages with the same lender, the costs involved can be lower than moving providers. However, your current lender may only be able to provide you with a limited number of options, so it’s worth comparing mortgages from across the market to find the best deal for you. Moving away from your current lender could mean you’ll have a much wider choice of mortgages at better rates.
If you decide that you do want to make a change, then before going straight to a lender and switching, mortgage brokers are a good place to start as they’ll help to make sure you get the best deal for your circumstances.
Switching mortgage eligibility criteria
Eligibility criteria vary between lenders but you can expect some similarities. When it comes to switching mortgage lenders, you will need to pass many of the same eligibility and affordability checks as you did when you took out your initial mortgage. To ensure you’re eligible for a good mortgage switch offer, you should:
- Check your credit report and understand your credit score. If there are any discrepancies or mistakes in your credit history, make sure to amend these before applying to switch your mortgage.
- Find out from your current provider exactly how much you still owe on your mortgage and whether you’re liable to pay any Early Repayment Charges or exit fees.
- Remember that lenders will want proof of income and your outgoings, so you’ll need to prepare the relevant information including your bank statements and pay slips or business accounts if you’re self-employed.
- Find out your home’s value.
- Work out how much equity you have in your home to find out your loan-to-value (LTV) ratio. A lower LTV typically means better mortgage rates.
Finding the best switch mortgage deal with L&C
If you’re thinking of switching mortgage deals, L&C can help you to work out how much money you could save, and whether you’re better off moving to a new lender or sticking with your existing one. Take a look at our cost of doing nothing calculator to see the impact of not switching to a better deal.
Our online Mortgage Finder makes it easy to compare the rates offered by your current lender to hundreds of other deals. When you’ve completed the Mortgage Finder, you’ll be able to see at a glance what you’re eligible for, and we’ll make sure that you qualify before you apply.
Once you’ve spoken to one of our mortgage experts and we’ve recommended the best option for you, you can either apply online or over the phone. We’ll be on hand to help guide you through the process from start to finish, and our advice won’t cost you a penny.
