Remortgaging can be a great way to reduce your monthly repayments once your fixed-rate mortgage ends. But should you remortgage with your existing lender? Or should you just call it quits and switch lenders altogether? We’ll compare the two to help bring you some clarity.
What’s this ‘remortgaging with the same lender’ thing all about?
Picture this: you’re happily paying off your mortgage each month when all of a sudden your monthly repayments skyrocket. Huh?? What went wrong?
Well, most of us are on something called a fixed-rate mortgage. This is when your monthly repayments are set at a fixed price for a certain period of time. But when this fixed-rate period ends, your lender will automatically move you onto something called their standard variable rate (SVR). This rate is usually much higher and, worse still, your mortgage lender can change it whenever they want without giving you any warning. It’s pretty sneaky!
To stop that from happening, you’ll need to remortgage. That’s what we call it when you change to a new mortgage, either with your existing lender or with a new one. Either way, you’ll be able to avoid falling onto the SVR and get a much better deal. But by choosing carefully, you may be able to save even more money, potentially getting a better rate than you were on in the first place. Kerching!
So, can I remortgage with the same lender?
Yes! Remortgaging with the same lender is pretty easy.
Firstly, they’ve already approved you for a mortgage in the past. And, assuming you’ve been settling your monthly repayments on time, they’re probably pretty confident you’ll continue to do so in the future.
Secondly, mortgages are their bread and butter. They don’t want you to go off searching for another lender, so they might even give you a better deal to encourage you to stay. The only curveball is if you’re hoping to take out a bigger mortgage than your last one, known as remortgaging to release equity. In this case, your lender will want to do some strict checks to make sure you’re going to be able to pay them back.
In short, remortgaging with the same lender is normally as easy as pie. But remortgaging with a new lender is pretty easy too – especially if you get a mortgage broker to sort the whole thing out for you. Better still, by switching lenders, you could save thousands of pounds each year.
With that in mind, let’s take a look at the pros and cons of remortgaging with the same lender.
Why should I remortgage with the same lender?
Here are some of the best things about sticking with your current lender.
- You could save on upfront costs: Changing to a new mortgage lender can come with upfront costs like redemption fees, conveyancing fees and – if you’re leaving your fixed-rate mortgage early – an early repayment charge (ERC). Your existing lender won’t need to carry out the same checks, so you’ll usually save on most of these costs. They might even waive the ERC if you decide to switch to a new deal with them a little early.
- It’s easier: Your current lender knows first-hand how good you are at making your monthly repayments. Plus, they’ve already carried out checks on you and approved you for a mortgage in the past. All this means that they probably won’t need to recheck your credit score and they’re likely to feel pretty happy at the idea of continuing to lend to you in the future.
- It’s faster: A new lender would need to treat your remortgage as a whole new mortgage application. But your current lender will already have all your details saved. This means they can simply switch you over to a new deal without having to value your home or carry out additional credit checks. So, it’ll be quicker.
Why shouldn’t I remortgage with the same lender?
Remortgaging with the same lender isn’t all sunshine and roses. Here’s the bad and the ugly.
- You’ll almost certainly miss out on better deals: There are over 100 mortgage lenders in the UK, so chances are at least one of them can offer you a better deal than your current lender. In some cases, switching lenders could save you thousands of pounds. A mortgage broker will be able to search the whole market to help find the best deal for you.
- You might get a higher valuation: A new mortgage lender will treat a remortgage as a whole new mortgage application. So, they’ll carry out a valuation on your property to check how much they think it’s worth. If your house has gone up in value a lot since you last took out a mortgage, you might find you hold more equity in your property (which is what we call it when you own more of your property outright). This could give you access to better deals.
- You might get offered incentives: A new mortgage lender might offer you incentives like cashback or free legal fees to encourage you to switch. While these incentives aren’t exactly going to make you rich, they could do away with a lot of the upfront cost of switching lenders. If we assume you’re also going to be getting a better deal, this makes switching a pretty attractive option!
Do I need a solicitor to remortgage with the same lender?
Nope! At least, not usually.
When you remortgage with the same lender, it’s known as a ‘product transfer.’ In other words, your existing lender is just moving you over to a different mortgage rather than putting in a whole new application. This means you won’t need a solicitor unless you’re making big changes like adding someone else to your mortgage.
If you’re switching lenders, on the other hand, you will need a conveyancing solicitor. But don’t let this put you off! Most lenders will offer you one for free, to encourage you to join them. So, it’s not something you’ll normally need to worry about.
Ultimately, we wouldn’t recommend basing your decision on whether or not you need a solicitor. If switching lenders is going to save you thousands of pounds in the long run, it’s probably going to be worth it!
How long does it take to remortgage with the same lender?
If you remortgage with the same lender, the whole thing can often be sorted in just a few days. However, if you remortgage with a new lender, you’re looking at around a 4 to 8-week wait once you’ve handed in your application.
Normally, we’d recommend thinking about remortgaging around 6 months before your fixed-rate mortgage ends. That way, you’ll have plenty of time to weigh up all the options, pick the best deal and get your remortgage application approved before falling onto that dreaded SVR (that’s the higher rate you’ll get moved onto once your fixed-rate mortgage ends). Check our guide to how long a remortgage takes for our recommended timeline.
Want a friendly word of advice? Get an independent mortgage broker who can search the whole market involved. Not only will they be able to find all of the juiciest deals, but they’ll sort out the application for you too. Some will even do it for free!
So, should I remortgage with the same lender?
Maybe, but that all depends on what’s going to save you money in the long run. We wouldn’t recommend sticking with the same lender without first comparing what you could get elsewhere.
Let’s put it like this: you might be able to save a few quid here and there by switching mobile phone providers or energy suppliers. But you could save thousands by changing mortgage lenders!
Ultimately, you’ll need to balance out the potential costs of switching (like legal fees and arrangement fees) against the amount you could save on your monthly repayments. Only then can you know for sure which is the best option.
If the idea of doing all that maths is a little daunting, don’t worry. When it’s time to start thinking about remortgaging, just get an independent mortgage broker involved. They’ll be able to search the whole market for the best deals for you and work out how to save you the most money.
Yes, that might mean sticking with the same lender. But it’ll almost always mean switching. At the end of the day, unless you explore all the options, you’ll never know!
Over to you
When it comes to remortgaging, all that’s left to say is this: don’t take the backseat! It can be tempting to do the easy thing by sticking with the same lender for another few years. But you’ll never know just how much you could save if you don’t at least explore what’s out there. It could be thousands of pounds a year!
Mortgage advisers will make things a breeze by scouring the market for the best deals for you. Then, whether you end up sticking with the same lender or switching to a new one, one thing’s sure. You can rest safe in the knowledge that you’re doing right by your bank account!