Switching your mortgage, also known as remortgaging, can be a smart financial move. It can help you save money, reduce your monthly payments, or pay off your mortgage sooner. But when is the right time to switch your mortgage? Let’s explore this question.
Understanding Remortgaging
Remortgaging involves moving your mortgage from one lender to another. Homeowners often choose to remortgage to take advantage of lower interest rates or better mortgage terms. It can also be a good option if your home’s value has increased significantly since you took out your mortgage.
When to Consider Remortgaging
- End of Your Initial Mortgage Deal: Most mortgage deals in the UK last for a specific period, typically two to five years. When this deal ends, your lender will usually move you onto its Standard Variable Rate (SVR), which can be higher than your initial rate. This is often the best time to consider remortgaging.
- Interest Rates Are Low: If interest rates have dropped since you took out your mortgage, remortgaging could save you money. Keep an eye on the Bank of England’s base rate and market trends.
- Your Home’s Value Has Increased: If your home’s value has risen significantly, you might be in a lower loan-to-value (LTV) band, and eligible for lower rates.
- You’re Concerned About Rate Changes: If you’re on a variable rate mortgage and there are signs rates may increase, you might want to switch to a fixed-rate deal to give yourself some certainty about your future payments.
- Your Circumstances Have Changed: If your income has increased, you might want to remortgage to a deal that allows overpayments, so you can pay off your mortgage sooner. Conversely, if you’re finding your repayments difficult to manage, you might want to switch to a deal with lower monthly payments.
Things to Consider Before Remortgaging
While remortgaging can offer several benefits, it’s not the right move for everyone. Here are a few things to consider:
- Early Repayment Charges: Check if your current mortgage deal has any early repayment charges. These can be hefty, especially if you’re still in the initial deal period.
- Exit Fees and Other Costs: There may be exit fees when you leave your current lender, and arrangement fees with your new lender. Consider these costs to ensure remortgaging is cost-effective.
- Your Current LTV: If your home’s value has decreased, or you’ve not had your mortgage long and haven’t built much equity, you might not be able to access the best deals.
Conclusion
Deciding when to switch your mortgage depends on your personal circumstances, the terms of your current mortgage, and the state of the mortgage market. It’s always a good idea to speak with a mortgage advisor who can provide tailored advice based on your situation.
Navigating the mortgage market can be complex, but you don’t have to do it alone. At Expert Mortgages, we’re here to guide you through the process and help you decide the best time to switch your mortgage. Reach out to us for expert advice tailored to your needs.
