When your current mortgage deal comes to an end, you’ll be faced with two options.
The first is to stay with your current lender and negotiate a new deal with them. This is called a ‘product transfer’.
The second is to look for a new mortgage altogether with a different lender: what’s known as a ‘remortgage’.
Choosing which one is right for you comes down to a series of factors. Before you make your decision, it’s worth weighing up the pros and cons of both.
This is well worth doing as The Financial Conduct Authority estimates one third of homeowners pay their mortgage-lender’s Standard Variable Rate. That means around two million households are potentially wasting money every month, when they could remortgage with another lender or get a better rate with their current one.
Product transfer: the less-hassle option?
Convenience isn’t something to be sniffed at and if you opt for a product transfer with your current lender, there’ll be a lot less paperwork (and probably, stress: although more on that shortly) than if you go somewhere else to remortgage.
Product transfers could also be a good option if your circumstances have changed since you took out your last mortgage. A new job, or a change in your relationship status for example, could restrict your options with a new lender, so staying with your current provider could make sense. Especially if you can obtain a fixed-rate deal, protecting you from future interest-rate rises. However, you do need to check that staying in your current home is still affordable. Your adviser can assess this for you.
However, can you be sure it’s the most competitive option? Here’s how we can help without any additional stress!
If you talk to us at Charles Cameron early on in the process we can get in touch with your current lender and find out which product transfer offers you’re eligible for. We can then compare the entire market. It’s hassle-free and provides you with the right advice.
One other thing to note: if you’re looking at increasing the amount you borrow with your existing lender, you’ll have to go through a more extensive process.
So, what’s the alternative?
Remortgage: can take longer, but better over time?
A new lender needs to tempt you to leave your current provider – and the most obvious way of doing this is by offering you a more competitive deal. This will usually involve a lower rate of interest than what you’re currently paying, meaning your monthly payments will be reduced. This is something which can save you a significant amount of money over the term of your mortgage.
However, there are disadvantages. Because the process involves looking into your personal and financial circumstances – as well as sending a surveyor round to value your property – it will take a few weeks to complete. Disagreements – say, over your property’s value – can lengthen the process and cause extra delays.
Finally, you should always look out for expensive booking fees: these may be used by new lenders to compensate for attractive repayment rates.
So, negotiating a new mortgage deal with a different lender might seem like a lot of pain for not a lot of gain but that doesn’t have to be the case. If you plan to manage it yourself then you’ll have to deal with all the extra paperwork – even if it pays off in the long run. However, Charles Cameron can take away the hassle.
Why a mortgage advisor makes sense
Whether you opt for a product transfer or decide to remortgage with a new lender, an independent mortgage advisor like Charles Cameron can guide you through the process. Not only will we give you expert, objective advice, but our extensive knowledge of the market means we’ll be able to negotiate the best deal for you. Plus, we’ll do all the time-consuming legwork by handling the application process and chasing valuations, underwriters and solicitors.
Base rate change
The Bank of England have reduced the Base Rate by 0.50% to 0.25%. This has not affected fixed mortgage rate deals at the moment, but it could impact you if you are on a Tracker mortgage. To discuss your mortgage options contact your adviser.
Speak to us today to find out if you could save time and money by using our advice service for your remortgage!