Sticking with Your Existing Lender
What’s a remortgage?
Remortgaging means replacing your current mortgage with a new one without moving home. When considering a remortgage, you have two main options. Firstly, you can stick with your current lender. Alternatively, you can opt for a different lender. Each choice has its own advantages and disadvantages.
Exploring different lenders gives you an excellent chance to find cost-saving deals that are better than your existing lenders’. However, this option demands more effort than sticking with your current provider.
In this guide, we’ll explore the nuances of both remortgaging options and help you understand how to navigate the process effectively. Whether you stay with your current lender or explore new options, we’ll provide valuable insights. This will help you make informed decisions and save money in the process.
Can I remortgage with the same lender?
Maintaining manageable mortgage expenses is a common goal. Consequently, remortgaging with your current lender can seem appealing. Historically, lenders often restricted product offerings for existing customers, sometimes resulting in less competitive options compared to the broader market. However, the landscape has evolved; now, most lenders offer more choices to existing clients. Yet, it’s essential to recognise variations between lenders in this regard.
Some lenders offer the same mortgage products to new and existing customers. Conversely, others may have distinct options designed exclusively for current borrowers. Occasionally, these rates are higher than those for newcomers. However, there are instances where loyalty is recognised and rewarded with discounted rates. These incentives encourage existing customers to stay with their current lender. Therefore, exploring these options and evaluating the terms is crucial. This helps determine the best path for managing your mortgage expenses.
Is it easier to remortgage with the same lender?
Indeed, remortgaging with your existing lender typically presents a more straightforward process than switching to a new provider. This simplicity arises because your current bank or building society has already approved a loan secured against your home. Consequently, there’s no need to treat the application as if it were a first-time mortgage. This means less paperwork and a potentially more attractive deal for you to explore.
Opting for a product transfer with your current lender allows you to refinance without involving a solicitor. This can further simplify the process. However, it’s worth noting that some banks may entice new customers with incentives such as cashback offers. This financial benefit could offset any legal fees from switching to another institution. Thus, it is worth considering when deciding between remortgaging with your current lender or exploring new opportunities.
What is a mortgage product transfer?
A mortgage product transfer allows individuals to switch their loan products with the same lender. This option is available when your current agreement ends or if you need extra funds and have equity in your home. Transferring a mortgage offers lower interest rates, better repayment terms, and other enticing benefits.
Many homeowners consider refinancing when looking to renovate or expand their house. If interest rates have significantly increased, switching from a Standard Variable Rate mortgage to a fixed rate, tracker, or discounted rate mortgage can help alleviate additional costs.
Switching your mortgage product might allow you to borrow more than your current loan or balance. Before approving, your lender must ensure this additional funding is within your financial reach. They will consider specific criteria when making their decision.
These criteria include:
- Employment status
- Income and expenditures
- Age
- The amount of equity you have in your home
Advantages of remortgaging with the same lender
Pros
Reduced Chance of Rejection
If your income has dropped and you seek a new lender, they might reject your application. However, sticking with the same lender who knows your financial situation can help. They have kept up-to-date on payments for your existing mortgage. Therefore, remortgaging should be much easier without providing additional wage slips or documentation.
Avoiding Significant Fees
If you want to remortgage and switch mortgage lenders, it’s crucial to remember that a solicitor is required for the conveyancing process. Changing from your existing loan involves added costs such as valuation fees or an Early Repayment Charge (ERC). These can become quite pricey, depending on your financial institution. Fortunately, some lenders offer special package deals to assist individuals wishing to remortgage without breaking the bank. Make sure you check those out, too.
Saving Time
Once you discover the potential advantages of a remortgage, you will likely want to proceed quickly. Staying with your current lender can make this a relatively straightforward task. However, if you are switching lenders, there may be more delay due to credit checks, affordability tests, and waiting for paperwork like proof of payments.
More Flexible Mortgage
Your new mortgage could be more flexible. You can borrow more by extending or reducing the term or changing the repayment type. You are not limited to your existing lender’s mortgage products.
If you remain with the same lender for your remortgage, it’s referred to as a ‘product transfer.’ In this process, your current lender transfers you to another mortgage without requiring an entirely new application. Enlisting a solicitor is only necessary if you make considerable changes, such as adding someone else to the loan agreement.
Conversely, consider the disadvantages to get a balanced view of what is best for you.
Mortgage product transfer vs. remortgaging
Advantages of remortgaging with a different lender
