When your mortgage deal is nearing its end, it’s a good idea to start thinking about switching to a new deal. Mortgage deals are also known as initial or introductory periods – they’re what you’re referring to if you say “a 5-year fixed,” for instance – and they can last anywhere from two years to your full mortgage term. They’re different from your mortgage term, which is the total length you’re repaying your mortgage over – usually 25 or 30 years to start.
If your deal ends but your mortgage term isn’t up yet, your lender will probably slip you onto their “standard variable rate” (SVR). An SVR is like a lender’s default rate – they set it according to their own criteria, it’s usually higher than interest rates you can get with a new deal, and it’s variable, so your repayments on an SVR can go up and down each month. Most people want to avoid going onto an SVR, so they switch to a new deal – also known as remortgaging.
You can search the whole market again and look for the best deal from all the available lenders. But you can also stick with your current lender, and get a new deal with them – that’s called a “product transfer”. You absolutely don’t have to stick with your current lender, and it’s almost always a good idea to see if you can get a better deal elsewhere – but there are sometimes benefits to staying put: it can be easier, faster, and cheaper in the short term.
Let’s get into how to remortgage with the same lender, dig into what the benefits are, and go into the many reasons why the grass might be greener with a new lender.
Remortgaging with the same lender: your questions, answered
The main benefit of remortgaging with the same lender is that it’s super easy. Plain and simple.
When you switch lenders, you need to reapply for a mortgage, and that means rounding up your important documents (here’s a reminder of what you need), having your property valued, and dealing with solicitors. And you usually need to start at least thinking about it about six months before your current deal ends.
When you stay with your existing lender, you usually don’t need to do any of that.
Here’s how it typically works:
- As your deal draws to an end, your lender will probably get in touch with a few different rates and offers for you to choose from, to entice you to stay with them.
- With the offers in front of you, you simply choose the deal you want to transfer to. In many cases, this can be done online with only a few clicks.
- Finally, you agree to the new terms — and that’s it. You’ve remortgaged. No extra checks or fees.
You can also remortgage with the same lender using a mortgage broker, (like Habito!). We can compare what your lender is offering you with the whole market, so you know for sure that you’re getting the best deal. You might be surprised at how much you could save by jumping ship!
How long does it take to remortgage with the same lender?
From start to finish, it normally takes around six weeks to switch to a new mortgage deal with the same lender. Your actual “transfer” from one deal to another should happen within a matter of days.
Switching lenders can take longer, which is why we always recommend giving yourself four to six months before your deal expires to do it.
If I remortgage with the same lender, do I need another credit check?
Although we can’t speak for every lender out there, in general, you won’t need a credit check to remortgage with your existing lender. That’s because they already know you can be trusted to make repayments.
If your credit score has taken a bit of a hit since you first got your mortgage, the lack of a credit check might make sticking with your current lender more appealing.
Do I need a solicitor to remortgage with the same lender?
Not always. For the most part, transferring to a new mortgage product is a straightforward process and won’t require any legal advice. But if you’re making any changes to your mortgage (like adding or removing someone), you’ll probably need to involve a solicitor.
Staying with your current lender vs a new lender: the pros and cons
Why should I stay with my current lender?
1. It can save you money up-front
Usually, staying with your existing lender means you won’t need to pay for legal work and a new property valuation. That can offer you a saving, at least in the short term.
That said, you should definitely weigh this against remortgaging to a deal that includes the lender picking up the tab for those fees, because lots do! Going down that route could save you more in the long run if you’re able to get onto a better rate with lower monthly repayments.
2. It saves time
Remortgaging with a new lender means a bit more prep work, and that means more time spent getting your ducks in a row. We suggest giving yourself four to six months before your current deal expires to get everything sorted. On the flip side, remortgaging with the same lender can be pretty fast – often, it’s done and dusted in a matter of weeks.
3. It saves you from the stress of applying
If things have changed considerably since your last mortgage application, your relationship with your current lender could come to your rescue.
Say, for example, you’ve changed jobs, or you were furloughed, and you’re now earning less than before – it can be stressful to go through a full mortgage application if you think you might, even just temporarily, fall outside a lender’s criteria.
Meanwhile, as long as you’re up to date with your repayments and you’re not in arrears, moments of life and financial changes won’t matter much to your current lender. They won’t ask for wage slips or proof of income this time around, which makes the whole process a bit smoother.
Why shouldn’t I remortgage with my current lender?
1. They might not have the best deal you could get
Your current lender’s offers are only a small slice of a much larger pie — and as an existing customer, you might not have access to their “new customer” deals, either. Plus, when they share their deals with you, they’ll often show them in comparison to their SVR to make them seem more tempting. But there’s every chance a new lender could beat those rates for you – sometimes by a lot!
So it always pays to check – use our remortgage calculator to see what you could save.
2. It’s not as flexible or attractive
Yes, we’re still talking about mortgages! When you remortgage with a new lender, besides probably having access to better rates, you can also take advantage of certain incentives – like zero solicitor fees, free valuations, or cashback offers.
And if your income has increased since you first took out your mortgage, you could be on the hunt for a mortgage deal that’s more flexible; for instance, one that lets you make unlimited overpayments without penalties. Finding the best remortgage deal for your current situation can call for casting your net wider than just what your current lender can offer you.
3. You could miss out on a better loan-to-value (LTV)
When you stick with your current lender, they probably won’t carry out a full property valuation. So, if you think your property has gone up in value since you first took out your mortgage, shopping around for a new lender could be the way to go.
This is where your loan-to-value (LTV) comes into play. LTV is the size of your mortgage as a percent of your property’s value. For example, if your home is worth £250,000 and your mortgage balance is £200,000, your LTV is 80%. Lenders think about LTV in bands, and unlock better rates for every 5% increment your LTV goes down.
So, using the same example, let’s say a new valuation reveals that your property’s value has gone up to £265k. That means your LTV is now 75% – giving you access to a wider choice of deals and better rates.
Should I remortgage with the same lender?
As with most things, it depends. Sticking with the same lender will probably save you time and money, at least in the short term. But just like staying with the same broadband or energy provider, it might not be the best value in the long run.
If you’re not sure whether you should stick or switch, chat with a mortgage expert to find out what’s right for your situation (it’s free!).