During the height of the pandemic in 2020, my husband and I took the opportunity to purchase our first home. The value of our house was £350,000, and we decided on a 5-year fixed rate mortgage at 1.99 percent, with a repayment term of 20 years. Currently, we still have £240,261.70 remaining to pay, with monthly payments of £1,501.00.
As the end date of our fixed rate approaches, we are considering the changes that will come and the inevitable increase in our interest rate. We want to ensure that we get the most competitive rate possible, so we are curious if it is possible to shop around with other banks and mortgage providers to find a better rate.
Fortunately, the answer to that question is a resounding “Yes!” It is highly recommended to review your options when reaching the end of a mortgage deal to ensure you are getting the best value out of your mortgage, especially considering the recent climb in interest rates. Working with a mortgage adviser who has access to a wide range of lenders will be beneficial in this process.
You can start shopping around up to 6 months before the end of your current deal, as most lender offers are valid for that period. This allows you to secure a rate now and potentially avoid further rate hikes. Even if rates ease, you can still review and switch deals. It’s important to understand any fees or penalties associated with switching lenders.
Ideally, the process should start around 3 months before the end of your current rate. This gives you enough time to smoothly transition to a new deal and avoid drifting onto the higher Standard Variable Rate. Starting sooner also helps you secure an offer before your current deal ends, preventing any Early Repayment Charges. The remortgage process typically takes 2-4 weeks, depending on complexities and timely document submission.
When comparing deals, it’s essential to consider all costs, not just the interest rate, as fees can significantly impact the overall cost. An adviser can assist in calculating the best overall package for you and comparing options from your current lender to ensure you are getting the best deal.
Remember, the process can start well in advance, depending on your current lender. If the switch is similar to your existing mortgage, there may not be an affordability check or legal work required. Your adviser can guide you through the entire process and help with the application, ensuring a smooth transition.
Feel free to ask any mortgage-related questions to David Hollingworth, our mortgage expert and a broker at L&C Mortgages. He will provide insightful answers to help you navigate the mortgage maze. Please email your questions to [email protected] with the subject line “Mortgage Help.”
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