Why moving lenders may not be the best option for a remortgage?

For those seeking to remortgage, it is not always in their best interests to move lender, and sometimes sticking with your existing mortgage lender (via product trasnfer) may be a better/cheaper option. It all depends upon money, timing, and personal circumstances.

• You own less than 10% of your property – if you need to borrow more than 90% of the current value of your property, you may struggle to find competitive mortgage deals. There are 95% mortgages increasingly available, however these tend to be aimed predominantly at buyers purchasing property rather than remortgaging.

• Your equity has shrunk – in some cases where the value of your property has fallen since purchase then this can cause challenges. For example, you had a 10% deposit when buying your home, borrowing the remaining 90%, if the overall value has fallen, then the amount you owe is a bigger proportion.

• Your circumstances have changed – if your financial position has altered since your current mortgage was taken out, perhaps one of you have stopped working, you became self-employed, or your income has fallen. New lenders may not be prepared to offer you a loan as you no longer fit their criteria.

• You have a poor credit history – since taking out your first mortgage, if your credit score has worsened, with any missed credit card, mortgage or utility payments, or loan defaults, then it will be more difficult to remortgage. In recent years, lenders have become more wary of the risks and selective of who they lend to.

• You have a very small mortgage – once your loan falls below a certain amount, for example £50,000, it may not be economic to switch lender, simply as you are less likely to make a saving if the fees are high. The smaller the mortgage you have, the larger the effect of any fees you pay to remortgage are, especially given that most new mortgage deals have a four-figure fee attached.

• You are very close to the end of your mortgage term – for borrowers at the very end of a long mortgage term, the costs of switching lender may be expensive and not worthwhile, and it may be worth comparing costs to that of a brand-new mortgage when required.

For those reasons, it pays to do some research into your current mortgage terms, to examine whether you are best off not making any changes unless your circumstances make it essential to do so.

Given the range of different lenders and mortgage types available, we strongly recommend that you seek advice from a qualified professional mortgage adviser before proceeding.

We will listen to your circumstances and make considered recommendations on the type of mortgage that may be most applicable to your circumstances. We also have access to the whole-of-market so can find the best deal in the market for your circumstances. Whether that is to do a product transfer or move to another lender. We will review the situation and provide you with the facts, so you are able to make an informed decision.

Contact us today for a FREE Mortagge review

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

There may be a fee for mortgage advice.

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