Question
My five-year fixed-rate mortgage expires in four months, and my lender has already offered me a new deal. I am concerned that rates may change before my current mortgage expires.
Should I secure a remortgage deal now and switch later if rates fall, or wait and hope for a cheaper rate?
Darren’s answer
This is a common question in today’s market – let’s take a look in more detail.
In terms of options available, there are generally two options, depending on your circumstances:
-
Option 1 – Stay with current lender (product transfer)
Moving the product can be easier and faster, however, there may be more competitive offers available which can save you more money over the course of the term.
The benefits of moving a product are that it is a faster process with less involvement because lenders typically do not require a new product evaluationOr subscription or proof of income. Also, there are often no legal or appraisal fees, as well as lower administrative costs
On the downside, you will have fewer options and possibly a higher rate than what is available in the broader market
-
Option 2: Remortgage to a new lender
Remortgaging means you have access to the entire market to secure the best rates and terms to suit your circumstances
There are also no-fee deals on offer, which could mean the cost of remortgaging is the same as staying with your current lender, although you may get a better rate.
If your property has increased in value, an appraisal may give you access to products with a better loan-to-value (LTV) rate.
Keep in mind that this is a full application and will require affordability and credit score verification and will generally take four to eight weeks
Since you have four months, this might be an avenue to explore to save money.
What to do next
I recommend speaking to a broker who can provide an evaluation of your options and give you the best rates on the market for your circumstances.
A broker can access your lender’s deals, as well as deals in the market, to get you the best mortgage deal possible. They will also monitor prices so that if they change, there may be an opportunity to switch again before starting your new product.
